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Antrim Energy Inc.

Annual Report
2012

MANAGEMENTS DISCUSSION AND ANALYSIS


This managements discussion and analysis (MD&A) provides a detailed explanation of Antrim
Energy Inc.s (the Company or Antrim) operating results for the fourth quarter and year ended
December 31, 2012 compared to the fourth quarter and year ended December 31, 2011 and should be
read in conjunction with the audited consolidated financial statements of Antrim. This MD&A has
been prepared using information available up to March 26, 2013. The audited consolidated financial
statements of the Company have been prepared in accordance with International Financial Reporting
Standards (IFRS). Unless otherwise noted all amounts are reported in United States dollars.
Non-IFRS Measures
Cash flow from operations, cash flow from operations per share and netback do not have standard
meanings under IFRS and may not be comparable to those reported by other companies. Antrim
utilizes cash flow from operations and netback to assess operational and financial performance to
allocate capital among alternative projects and to assess the Companys capacity to fund future capital
programs.
Cash flow from operations is defined as cash flow from operating activities before changes in working
capital. Cash flow from operations per share is calculated as cash flow from operations divided by the
weighted-average number of outstanding shares. Reconciliation of cash flow from operations to its
nearest measure prescribed by IFRS is provided below.
Calculation of Cash Flow from Operations
Three Months Ended

Year Ended

December 31

December 31

2012

2011

2012

2011

3,495

10,843

(8,671)

8,941

Less: change in non-cash working capital

11,633

11,676

4,717

12,688

Cash deficiency from operations

(8,138)

(833)

(13,388)

(3,747)

($000s)
Cash flow provided by (used in) operating activities

Overview
During 2012, Antrim completed the sale of its Argentina operations and focused solely on its UK
North Sea and Irish assets. In November 2012, Antrim achieved a significant milestone when the
Causeway Field commenced production. Following first production from the Causeway Field, the
Company achieved first production from the Cormorant East Field in January 2013 from the discovery
of oil at well 211/21-N94 (the Contender Well) drilled in October 2012. On March 26, 2013,
planning was discontinued for the development of the Fyne Field following a significant escalation of
expected future development costs.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 1

Overview of Continuing Operations


Causeway Licences
Licence P201 Block 211/22a South East Area and P1383 Block 211/23d, Antrim 35.5%
The Causeway Licences include the Causeway Field, the Fionn Field and the West Causeway area.
The Causeway Licences total gross proved plus probable reserves decreased by 4% from 12.5 million
barrels (4.4 million net to Antrim) to 12.0 million barrels (4.3 million net to Antrim) as at December
31, 2012 due to 2012 production and technical revisions following initial field performance data.
Subsequent to December 31, 2012, with an early indication of significant cost increases, Antrim
elected to opt out of the Fionn Field development, which will result in a decrease of total gross proved
plus probable reserves of 4.9 million barrels (1.7 million net to Antrim).
Production from the Causeway Field averaged 4,081 gross barrels of oil per day (bopd) (Antrim net
1,194 bopd) from November to December 31, 2012 compared to nil in 2011. Oil production is
transported by pipeline to the North Cormorant production platform where it is processed before being
exported to the Sullom Voe terminal via the Brent Pipeline System for sale. Under a contract with the
purchaser, Antrim invoices and receives payment for its oil in the month after production; however,
the purchaser retains certain rights impacting the timing of liftings which may result in no sales in a
particular month resulting in deferred revenue. During 2012, no oil revenue was recorded ($nil
2011) as there were no oil liftings. Deferred revenue of $1.1 million ($nil 2011) was recognized in
2012 relating to oil produced and collected but not lifted from the terminal.
Rig operations commenced in January 2013 to complete the water injector for the Causeway Field and
were completed in February 2013. Anticipated startup of the downhole electrical submersible pump
(ESP) will follow completion of topside modifications on the North Cormorant production platform,
and is scheduled for the second half of 2013. The recently completed water injection well is expected
to commence operation in 2014, with a possibility of it being accelerated to the second half of 2013.
As part of the sale of a 30% working interest in the Causeway Licences to Valiant Petroleum plc
(Valiant) in October 2011, Antrim entered into a Differential Lifting Agreement (DLA) giving
Valiant the right to 6.25% of Antrims share of produced oil. Antrims share of oil produced will be
reduced to 29.25% until a cumulative value of $8.9 million after-tax is received by Valiant. Once
satisfied, Antrims working interest in production will revert back from 29.25% to 35.5%.
Under the terms of the Fionn Field Supplementary Agreement with Valiant, Antrim had an option for
three months following first oil production from the Causeway Field to opt out of participating in the
Fionn Field development and sell its 35.5% working interest share to Valiant for the cost of its 35.5%
working share of the Fionn Field pre-investment costs, or to confirm its continued participation by
repaying its share of the Fionn pre-investment costs plus interest.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 2

In February 2013, Antrim announced that it had elected to opt out of participating in further
development of the Fionn Field. The projected costs associated with the development of Fionn had
increased to the extent that the project no longer met Antrims economic criteria. Subject to all
necessary approvals from the UK Department of Energy and Climate Change (DECC), Antrim
intends to withdraw from the Fionn Field subarea and will not incur any further liabilities. As a result,
an impairment charge of $50.4 million was recorded in the fourth quarter of 2012 representing the full
carrying value relating to the Fionn Field.
Contender Licence
P201 Block 211/22a Contender Area, Antrim 8.4%
The Contender Licence contains the Cormorant East Field. Cormorant East Field total gross proved
plus probable reserves increased from nil to 7.3 million barrels (0.6 million net to Antrim) as at
December 31, 2012 due to the successful drilling of exploration well 211/21-N94 (the Contender
Well) as announced on October 22, 2012.
On January 14, 2013, Antrim announced that first oil production had been achieved from the
Cormorant East Field after 85 days following discovery of the field. Production is processed through
the North Cormorant platform before being exported to the Sullom Voe terminal. The Cormorant East
Field is initially being produced under primary depletion with a single production well, with the
potential to install a water injection scheme and/or additional production wells at a later date. Future
drilling locations are being considered by the partners.
Under the terms of the farm-out agreement with the operator, 100% of the drilling, completion and tie
in costs of the Contender Well were funded by the operator. Antrim will receive its share of
production after Antrims working interest share of the completion and tie in costs is recovered from
production revenue.
Kerloch Licence
P201 Block 211/22a Kerloch Area, Antrim 13.65%
The Kerloch Licence includes the Kerloch discovery made in 2007. With the successful drilling of the
Contender Well, TAQA also earned a 35% working interest in the adjacent Licence P201 Block
211/22a Kerloch Area, reducing Antrims working interest from 21% to 13.65%.
Fyne Licence
P077 Block 21/28a Fyne, Dandy and Crinan, Antrim 100%
The Fyne Licence includes the Fyne Field, the Dandy Field and the Crinan Field (formerly referred to
as Area 4). Total proved plus probable reserves at December 31, 2012 decreased by 50% to 11.8
million barrels from 23.3 million barrels (gross) in 2011. The change was due to the results of well
21/28a-11 drilled in the East Fyne area, a decrease in reserves attributed to the Dandy Field due to no
further development currently being planned, and the upgrade in reserve category in the Crinan Field
due to it being cited as part of a potential phase 2 development of the Fyne Licence. Antrims net
reserves in the Fyne Licence increased by 44% from 8.2 million barrels to 11.8 million barrels as the
decrease in gross reserves was offset by an increase in working interest from 35.1% to 100%.
ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 3

On March 26, 2013 the Company discontinued development of the Fyne Field. Until very recently,
estimated costs indicated that the planned Fyne development satisfied the Companys economic
threshold and contingent on timing of the redeployment of the FPSO from its current location was on
track for a late 2014 start-up. However, projected capital costs have recently increased substantially,
and in the Companys view now make the project uneconomic.
The majority of costs associated with the Fyne Field were written off in March 2012. No further
material write downs associated with the Fyne Field are anticipated as recent work has been confined
to front end engineering design work for the subsea facilities and modification to the FPSO.
Erne
P1875 21/29d, Antrim 50%
Licence P1875 contains the Erne discovery drilled in 2011 and the Corrib prospect. The Erne
sidetrack well 21/29d-11Z well is suspended for possible future incorporation into neighbouring
infrastructure A separate prospect has been identified to the southwest, named Corrib, which may also
be assessed for possible future incorporation into neighbouring infrastructure.
Carra
P1563 Blocks 21/28b and 21/29c, Antrim 100%
Licence P1563 contains the Carra Prospect, the Riddon and Scavaig discoveries and several other
prospects. In October 2012, DECC agreed to waive the contingent well obligation on Licence P1563
Blocks 21/28b & 21/29c as it was determined by Antrim that there was insufficient potential to
proceed with drilling. The licence was relinquished in February 2013.
Cyclone and Typhoon
Licence P1784 Block 21/7b, Antrim 30%
Licence P1784 Block 21/7b is located in the Central North Sea, north of the Greater Fyne Area and
contains the Cyclone and Typhoon Tertiary Cromarty prospects. The licence was acquired jointly
with Premier (70%, Operator) with a firm well commitment.
In November 2012, Cyclone well 21/7b-4 was drilled and encountered 105 feet of very porous and
permeable Tertiary Cromarty sands. Well logs identified only residual oil, suggesting that the trap
was breached and the well was plugged and abandoned. As a result, an impairment charge of $5.9
million was recorded in the fourth quarter of 2012, representing the full carrying value relating to
Block 21/7b.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 4

Ireland
Licensing Option 11/5 Blocks 44/4, 44/5 (part), 44/9, 44/10, 44/14, 44/15, Antrim 100%
Antrim holds a Frontier Licence Option (the Skellig Block) in the Porcupine Basin approximately
110 km off the southwest coast of Ireland. Antrim has licenced, reprocessed and interpreted 2D
seismic data and has identified the Dunree Prospect. Antrim is currently planning a 3D seismic
programme and is seeking partners to joint venture on the block. Participation in the block has
received strong interest from industry.
Tanzania
Production Sharing Agreement - Pemba and Zanzibar
Antrim holds an option to acquire a 20% interest in the production sharing agreement for the PembaZanzibar exploration licence offshore and onshore Tanzania (the P-Z PSA) following the predrilling (seismic) phase and an additional 10% interest to be exercised up to 180 days following
receipt of the initial drilling results. Should Antrim exercise the initial option, costs for the seismic
phase associated with Antrims acquired interests would be repaid from future production. RAK Gas,
the Operator, has submitted a proposal for a revised work programme to the federal government of
Tanzania. Environmental impact assessment work has commenced, with seismic operations expected
to proceed in the near future.
On October 29, 2012, an agreement between the federal government of Tanzania and the government
of Zanzibar on the sharing of any future hydrocarbon revenues was announced, potentially ending a
moratorium which has delayed exploration of the licence. The agreement has still to be ratified and
final details are still to be agreed. It is not yet known what, if any, impact this agreement will have on
the P-Z PSA.
Reserves Update
In February 2013 Antrim elected out of participating further in the Fionn Field development and on
March 26, 2013 the Company discontinued development of the Fyne and Crinan Fields following a
significant escalation of expected future development costs. The impact on Antrims reserves is as
follows:
Net
UK proved plus probable reserves
At December 31, 2012

(Mbbls)
16,626

Less:
Fionn Field

(1,727)

Fyne and Crinan Fields

(11,758)

Revised proved plus probable reserves

The updated present value cash flow after tax using a 10% discount rate is $144,775,000.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 5

3,141

Corporate
On January 23, 2013, Antrim announced that it entered into a $30 million Payment Swap transaction
with a major financial institution. The Payment Swap provided Antrim with sufficient funding to meet
its commitments for cost overruns on the completion of the production well in the Causeway Field,
future costs related to the Causeway water injection well and initial FEED work associated with the
Fyne Field.
Under the terms of the Payment Swap, $30 million is repayable in 29 instalments commencing
September 2013 and concluding January 2016. The interest rate under the Payment Swap is fixed at
5.1%. To enable Antrim to pay amounts under the Payment Swap, Antrim also entered into a Brent
Oil Price Commodity Swap for a forward sale of 657,350 barrels of Brent crude oil at a fixed price of
$89.37 covering the period from February 2013 to December 2015.
Financial Discussion of Continuing Operations
All amounts reported in this MD&A related to the three month periods ended December 31, 2012 and
2011 are unaudited.
Three Months Ended
December 31

Year Ended
December 31

2012

2011

2012

2011

8,138

833

13,388

3,747

Financial Results ($000s except per share amounts)


Cash deficiency from operations (1) continuing operations
Cash deficiency from operations per share

(1)

0.04

0.00

0.07

0.02

Net loss continuing operations

67,155

15,975

134,859

55,110

Net loss

67,155

14,951

134,544

52,970

0.37

0.09

0.73

0.32

Net loss per share basic, continuing operations


Total assets

96,520

239,177

96,520

239,177

(10,734)

52,674

(10,734)

52,674

26,771

10,634

63,034

14,702

End of period

184,731

184,116

184,731

184,116

Weighted average basic

184,848

184,108

184,388

173,997

Weighted average diluted

185,681

185,530

185,528

175,412

Working capital (deficiency)


Capital expenditures
Bank debt
Common shares outstanding (000s)

(1) Cash flow from operations and cash flow from operations per share are Non-IFRS Measures. Refer to Non-IFRS Measures in
Managements Discussion and Analysis.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 6

Production
From early November to December 31, 2012, gross daily oil production from the Causeway Field
averaged gross 4,081 bopd (Antrim net 1,194 bopd).
The following table provides oil production and sales from the Causeway Field for the year ended
December 31, 2012.
(barrels)
Gross production (1)
Net production (2)
Ending inventory (3)
Sales

2012
146,870
42,950
42,950
-

2011
-

(1) Gross production is after linefill and deadstock of 106,153 barrels


(2) Per the DLA, Antrims share of oil produced is reduced to 29.25% until a cumulative value of $8.9 million after tax is received by
Valiant

(3) Ending oil inventory is net of process and shrinkage

Revenue
Revenue is recognized when title and risk transfer to the purchaser, which occurs at the time of lifting
into a tanker at the Sullom Voe terminal. All sales from Causeway are made under contract to one UK
customer. Under the contract with the purchaser, Antrim invoices and receives payment for its oil in
the month after production; however, the purchaser retains certain rights impacting the timing of
liftings which may result in no sales in a particular month resulting in deferred revenue.
The Company did not record any revenue in 2012 (2011 nil) as there was no oil lifted from the
terminal in 2012.
General and Administrative
General and administrative (G&A) costs increased to $5.8 million for the year ended December 31,
2012 compared to $5.0 million in 2011. The increase in G&A costs was primarily due to employee
compensation.
During 2012, Antrim capitalized $0.6 million (2011 $0.6 million) of G&A costs related to
exploration and development activity.
Exploration & Evaluation Expenditures
Exploration and evaluation (E&E) expenditures increased to $7.6 million for the year ended
December 31, 2012 compared to $0.3 million for the same period in 2011. E&E expenditures
increased to $6.3 million for the three month period ended December 31, 2012 compared to $0.03
million for the same period in 2011. The increase in E&E expenditures is primarily related to work on
the development plan for the Fyne Licence.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 7

Impairment
In January 2013, the Company elected not to participate in further development work on the Fionn
Field. As a result, an impairment charge of $50.4 million was recognized in the fourth quarter of
2012, representing the full carrying value relating to the Fionn Field. Antrim retains a 35.5% interest
in the remainder of Licence P201 Block 211/22a South East Area.
In December 2012, the Company announced that the Cyclone exploration well in UK Block 21/7b was
plugged and abandoned. As a result, an impairment charge of $5.9 million was recognized in the
fourth quarter of 2012 representing the full carrying value of the licence.
Licence P1625 Block 21/24b (West Teal) is nearing the end of its initial exploration term and based
on an evaluation performed by management the licence is not considered economically viable. As a
result, the Company recognized an impairment charge of $1.8 million in the fourth quarter of 2012,
representing the full carrying value of the licence.
In October 2012, DECC agreed to waive the seismic and contingent well obligations on Licence
P1563 Blocks 21/28b & 21/29c (Carra) and allowed the Company to relinquish the licence in its
entirety. The Company recognized a $2.3 million impairment charge in the third quarter of 2012
representing the full carrying value of the licence.
In addition the Company recorded impairment charges consisting of $60.1 million for the Fyne
Licence and $2.1 million on the drilling of the Erne discovery well and the Erne sidetrack well in the
first and second quarters of 2012. The impaired costs relating to the Erne discovery well and the Erne
sidetrack well are in addition to a $10.3 million impairment charge recorded in 2011.
Discontinued Operations
On May 28, 2012, Antrim completed the sale of Antrim Argentina S.A. to Crown Point Energy Inc.
(Crown Point) (formerly known as Crown Point Ventures Ltd.) by way of a plan of arrangement
effected under the Business Corporation Act (Alberta) (the Arrangement). Under the terms of the
Arrangement, the Company received a cash payment of $9.9 million (net of adjustments of $1.0
million) and 35,761,290 common shares of Crown Point (Crown Point Shares). The Crown Point
Shares were distributed to Antrims shareholders in accordance with the terms of the Arrangement on
June 7, 2012 (the Distribution Date). As a result of the sale, the Company recognized a gain on the
disposal of the Argentina assets of $5.9 million and income from discontinued operations for the year
ended December 31, 2012 of $0.3 million (2011 - $2.1 million).
The financial and operating results for discontinued operations for the year ended December 31, 2012
include only the results up to May 28, 2012, the date of sale of the Argentina operations, and are no
longer comparable with the 2011 results.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 8

Reduction in the Fair Value of Financial Assets


On the Distribution Date, the closing price of the Crown Point Shares on the TSX Venture Exchange
was Cdn $0.51 which had decreased from the May 28, 2012 closing share price of Cdn $0.80. This
reduction in the share price of the Crown Point Shares resulted in the Company recognizing a capital
loss on the Crown Point Shares of $10.0 million. This amount has been recognized in the 2012
consolidated statement of comprehensive loss as a reduction in the fair value of financial assets.
Finance Income
Finance income relates to interest income on short-term deposits and was $0.3 million (2011 - $0.7
million) for the year ended December 31, 2012.
Finance Costs
Finance costs were $0.2 million for the year ended December 31, 2012 (2011 - $0.6 million) and relate
to accretion of decommissioning obligations, interest expense and bank charges.
Income Taxes
Current income tax assets and liabilities are measured at the amount expected to be recovered from or
paid to the taxation authorities. The Company did not pay or recover any taxes during the year ended
December 31, 2012.
The Company follows the liability method of accounting for income taxes. As at December 31, 2012,
no deferred income tax assets were recorded due to uncertainty with respect to the ability of Antrim to
generate sufficient taxable income to utilize the unrecognized losses.
Cash Flow and Net Loss
In the three month period ended December 31, 2012, Antrim had a cash deficiency from operations of
$8.1 million ($0.04 per share) compared to cash deficiency from operations of $0.8 million ($0.00 per
share) in the same period in 2011. For the year ended December 31, 2012, Antrim incurred a cash
deficiency from operations of $13.4 million ($0.07 per share) in 2012 compared to a cash deficiency
from operations of $3.7 million ($0.02 per share) in 2011. The cash deficiency from operations
increased in 2012 primarily due to higher exploration and evaluation expenditures.
In the fourth quarter of 2012 and 2011, Antrim incurred net losses of $67.2 million and $15 million
respectively. For the year ended December 31, 2012, the Company incurred a net loss of $134.5
million compared to $53 million in 2011. The increase in the net loss was due to impairment charges
for the Fionn Field, the Fyne Licence, West Teal Licence and the Cyclone - Typhoon licence and E&E
expenditures on the Fyne Licence.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 9

Capital Expenditures
Antrim incurred capital expenditures in 2012 related to petroleum and natural gas properties of $63
million (2011 - $14.7 million). Capital expenditures in 2012 consisted of $54.5 million for the
ongoing development costs of the Causeway Licence, $5.5 million in exploration costs related to the
Cyclone well, and $1.6 million for the drilling of the Erne discovery well.
Foreign Exchange Loss and Comprehensive Income (Loss)
The measurement currency of the Company is the Canadian dollar, while its reporting currency is the
US dollar. A significant portion of the Companys activities are transacted in or referenced to US
dollars, Canadian dollars and British pounds sterling. The Companys operating costs and certain of
the Companys payments in order to maintain property interest are made in the local currency of the
jurisdiction where the applicable property is located. As a result of these factors, fluctuations in the
Canadian dollar, British pounds sterling and US dollar could result in unanticipated fluctuations in the
Companys financial results.
The Company incurred a foreign exchange loss of $0.5 million from continuing operations for the year
ended December 31, 2012 compared to a loss of $0.7 million in 2011.
The Company realized a gain of $3.2 million in accumulated other comprehensive income related to
discontinued operations for the year ended December 31, 2012.
Financial Resources and Liquidity
In the fourth quarter of 2012, the Company incurred unexpected cost overruns on the development of
the Causeway Field, resulting in a working capital deficiency of $10.7 million as at December 31,
2012. In January 2013, Antrim entered into the $30 million Payment Swap transaction which provides
Antrim with sufficient funding to meet its commitments.
Accounts payable and accrued liabilities were $18.1 million at December 31, 2012 primarily related to
costs for the development of the Causeway and Fyne Fields and the Cyclone drilling program in
November, compared to $17.2 million as at December 31, 2011.
Antrim invests unrestricted cash not required for immediate operational needs in short-term bankers
acceptances and money market instruments.
Although there have been improvements in the global economy and financial markets, restrictions on
availability of credit remain and may limit Antrims ability to access debt or equity financing for its
development projects. Antrim forecasts cash flows against a range of macroeconomic and financing
market scenarios in an effort to identify future commitments and arrange financing, if necessary.
Antrims planned capital program for 2013 includes ongoing development of the Causeway Field, the
Cormorant East Field and new ventures.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 10

Contractual Obligations, Commitments and Contingencies


Antrim has several commitments in respect of its petroleum and natural gas properties and operating
leases as at December 31, 2012 as follows:
($000s)

2013

2014

2015

2016

2017

Thereafter

United Kingdom
Causeway (1)
Cormorant East
Fyne and Dandy (2)
Cyclone-Typhoon (3)
West Teal (4)
Carra (5)
Erne
Ireland
Office leases

16,079
654
2,913
13
13
69
358

7,073
8
33
12
13
359

27
8
33
372

29
8
33
372

31
8
33
350

31
8
33
10

Total

20,099

7,498

440

442

422

82

(1) Relates to Antrims 35.5% interest in the Causeway Licences.


(2) In 2012, Antrim signed a Heads of Terms agreement for an option to lease an FPSO for use in the development of the Fyne Field. As
the Company decided not to proceed with the development of the Fyne Field., there is a $2.8 million obligation related to front end
engineering design work. This obligation is included in the consolidated balance sheet as at December 31, 2012 under accounts payable
and accrued liabilities.
(3) The Company has a $6.2 million contingent drilling commitment on this licence for the Typhoon prospect in 2014. Due to the results of
the Cyclone well, the Company has asked DECC to accept this well as a fulfillment of the drilling obligation. Contingent on DECC
acceptance, there are no remaining obligations for the initial term of the licence.
(4) The Company has a $24.0 million contingent drilling commitment on this licence for the West Teal prospect in 2013. Due to the
Company being unable to identify a commercially viable export route a request was made to DECC to waive the contingent well
requirement and, with DECCs consent, allow the licence to be relinquished.
(5) In October 2012, DECC waived all commitments related to the Licence P1563 Blocks 21/28b & 21/29c. In February 2013 the licence
and all commitments were officially relinquished.

In 2011, the Company entered into a variation to an existing contract for drilling management services
in the UK North Sea which required the drilling of two wells, estimated to take 50 days in a letter of
intent preceding the contract variation. The Company contends that it met its contractual obligations
under this variation through the drilling of the Erne discovery well (21/29d-11) and the Erne sidetrack
well (21/29d-11Z). The drilling of these two wells took place over a period of 58 days. Subsequent to
releasing the rig, the Company received an invoice from the drilling management services contractor
charging the Company for approximately $5 million in additional costs as the contractor claims all
conditions of the contract had not yet been satisfied. In July 2012, the drilling management services
contractor filed a claim against the Company for the additional invoice costs plus interest and lost
management time, in the High Court of England and Wales. In August 2012, the Company filed a
defence against this claim in the High Court of England and Wales. A case management conference
where the Court will set the timetable for the claim going forward has been listed for April 12, 2013.
The Company is disputing the additional costs and believes it is more likely than not that it will not
have to pay. As a result, a contingent liability has not been recorded.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 11

In January 2013 the Company elected not to participate in further development work on the Fionn
Field. Subject to all necessary approvals from DECC, Antrim intends to withdraw from the Fionn
Field subarea and will not incur any further liabilities. In accordance with the Fionn Field
Supplemental Agreement signed in January 2012, the Company is of the position that there are no
further obligations with respect to the decommissioning or well abandonment liabilities of the three
currently suspended wells in the Fionn Field subarea. The operator contends this position in regards to
two of the three currently suspended wells. The Company is disputing the operators position and
believes it is more likely than not that Antrim will be released of these obligations. Accordingly, no
amounts have been recorded in decommissioning obligation in relation to the Fionn Field.
Risks and Uncertainties
The oil and gas industry involves a wide range of risks which include but are not limited to the
uncertainty of finding new commercial fields, securing markets for existing reserves, commodity price
fluctuations, exchange and interest rate costs and changes to government regulations, including
regulations relating to prices, taxes, royalties, land tenure, allowable production and environmental
protection and access to off-shore production facilities in the UK. The oil and natural gas industry is
intensely competitive and the Company competes with a large number of companies that have greater
resources.
Substantial Capital Requirements
The Companys ability to increase reserves in the future will depend not only on its ability to develop
its present properties but also on its ability to select and acquire suitable exploration or producing
properties or prospects. The acquisition and development of properties also requires that sufficient
funds, including funds from outside sources, will be available in a timely manner. The availability of
equity or debt financing is affected by many factors, many of which are outside the control of the
Company. Recent world financial market events and the resultant negative impact on economic
conditions have increased the risk and uncertainty of the availability of equity or debt financing.
In January 2013, Antrim entered into a payment swap for $30 million and a forward sale of 657,350
barrels of Brent crude oil. The Company's anticipated revenue for 2013, as well as the Company's
ability to repay the payment swap, is dependent upon the future production rates from the Causeway
and Cormorant East fields as well as oil prices.
Foreign Operations
A number of risks are associated with conducting foreign operations over which the Company has no
control, including currency instability, potential and actual civil disturbances, restriction of funds
movement outside of these countries, the ability of joint venture partners to fund their obligations,
changes of laws affecting foreign ownership and existing contracts, environmental requirements, crude
oil and natural gas price and production regulation, royalty rates, OPEC quotas, potential expropriation
of property without fair compensation, retroactive tax changes and possible interruption of oil
deliveries.
Further discussions regarding the Companys risks and uncertainties, can be found in the Companys
Annual Information Form dated March 26, 2013 which is filed on SEDAR at www.sedar.com.
ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 12

Outlook
Antrim expects to see increased production from the Causeway Field following deployment of the
ESP in the second half of 2013, and the implementation of the water injection scheme scheduled to
commence operation in 2014, with a possibility of it being accelerated to the second half of 2013.
Following the discovery of the Cormorant East Field by the Contender Well, Antrim anticipates
planning at least one appraisal well, downdip of the discovery well and a plan to explore the adjacent
fault compartments.
Recent seismic studies on the Skellig block in the Porcupine Basin offshore Southwest Ireland has
high graded the Dunree Prospect, adjacent to the licence holding the Dunquin Propsect, which is
expected to be drilled by its operator and joint venture partners in the second quarter of 2013. Antrim
is currently seeking partners to joint venture on the block and has received strong interest from the
industry.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 13

Summary of Quarterly Results

($000, except per


share amounts)

Oil, Natural Gas


and NGL Revenue,
Net of Royalties

2012
Fourth quarter1
Third quarter

Second quarter
First quarter

2011
Fourth quarter 1
Third quarter 1
Second quarter 1
First quarter 1
1.

Cash Flow from


Operations
(Deficiency)

Net
Loss

Net
Loss Per
Share Basic

(8,138)

67,155

0.37

(472)

5,240

0.03

(3,177)

6,373

0.03

(1,601)
(13,388)

56,091
134,859

0.30
0.73

(833)
(894)
(1,215)
(805)
(3,747)

15,362
36,800
1,503
1,445
55,110

0.10
0.20
0.01
0.01
0.32

Quarterly results reflect continuing operations only

Key factors relating to the comparison of net loss for the last eight quarters are as follows:
In the fourth quarter of 2012, the Company recognized a $50.4 million impairment charge
related to the decision not to participate in further development of its 35.5% working interest
in the Fionn Field, a $5.9 million impairment charge related to the abandonment of the
Cyclone well 21/7b-4 and a $1.8 million impairment charge related to the West Teal Licence;
In the third quarter of 2012, the Company recognized a $2.3 million impairment charge related
to the planned relinquishment of Carra Licence P1563 Blocks 21/28b & 21/29c;
The second quarter 2012 net loss was impacted by a $10 million reduction in the fair value of
the Crown Point shares partially offset by a $5.9 million gain on the disposal of the Argentina
assets;
During the first quarter of 2012, net loss was negatively impacted by $54.7 million in
impairment costs related to the Fyne Licence and the Erne discovery well and Erne sidetrack
well;
In the fourth quarter of 2011, the Company recognized an impairment charge of $10.3 million
related to the Erne discovery well 21/29d-11 and Erne sidetrack well 21/29d-11Z;
During the third quarter of 2011, the Company recognized an impairment charge of $35.6
million due to the sale of the 30% interest in the Causeway Licences.
Critical Accounting Estimates
Our significant accounting policies are detailed in Note 3 to the audited consolidated financial
statements. In determination of financial results, Antrim makes certain critical accounting estimates
described as follows:

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 14

Estimation of reserve quantities


Depletion, impairment and asset retirement charges are measured based on the Companys estimate of
oil and gas reserves. The estimation of reserves is an inherently complex process and involves the
exercise of professional judgment. Reserves have been evaluated at the balance sheet date by an
independent qualified reserve evaluator in accordance with National Instrument 51-101 Standards of
Disclosure for Oil and Gas Activities and are based on the definitions and guidelines contained in the
Canadian Oil and Gas Evaluation Handbook.
Oil and gas reserve estimates are based on a range of geological, technical and economic factors
including projected future rates of production, estimated commodity prices, engineering data, reserve
type and timing and amount of future expenditures, all of which are subject to uncertainty.
Assumptions reflect market and regulatory conditions existing at the balance sheet date, which could
differ significantly from other points in time throughout the year, or future periods. Changes in market
and regulatory conditions and assumptions can materially impact the estimation of net reserves.
Recoverability of exploration and evaluation costs
Exploration and evaluation costs are initially capitalized with the intent to establish commercially
viable reserves. The Company is required to make estimates and judgments about future events and
circumstances regarding the economic viability of extracting the underlying resources. The costs are
subject to technical, commercial and management review to confirm the continued intent to develop
and extract the underlying resources. Fluctuations in future commodity prices, resource quantities,
expected production techniques, drilling results, production costs and required capital expenditures are
important factors when making this determination. If a judgment is made that extraction of the
reserves is not viable, the exploration and evaluation costs will be written off to net earnings.
Decommissioning obligations
The Company recognizes liabilities for the future decommissioning and restoration of property, plant
and equipment. These provisions are based on estimated costs, which take into account the anticipated
method and extent of restoration consistent with legal requirements, technological advances and the
possible use of the site. Actual costs are uncertain and estimates can vary as a result of changes to
relevant laws and regulations, the emergence of new technology, operating experience and prices. The
actual timing of future decommissioning and restoration is not known and may change due to certain
factors, including reserve life. Changes to assumptions made about future expected costs, discount
rates, inflation and timing may have a material impact on the amounts presented. The Company has
chosen to measure decommissioning obligations using a risk-free discount rate.
Impairment of property, plant and equipment
The recoverable amounts of cash-generating units (CGUs) and individual assets have been
determined based on greater of value-in-use or fair value less costs to sell calculations. The key
assumptions the Company uses in estimating future cash flows for purposes of calculating value-in use
or fair value less costs to sell are future oil prices, expected production volumes, future development
costs, operating costs and the discount rate applied to reflect the time value of money. Changes to
these assumptions will affect the recoverable amounts of CGUs and individual assets and may then
require a material adjustment to their related carrying value.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 15

The determination of CGUs requires judgement in defining a group of assets that generate cash
inflows that are largely independent of the cash inflows from other assets or groups of assets. CGUs
are determined by similar geological structure, shared infrastructure, geographical proximity,
commodity type, similar exposure to market risks and materiality.
Fair value of share-based compensation
The fair value of share-based compensation is calculated using a Black-Scholes option-pricing model.
There are a number of estimates used in the calculation such as future forfeiture rate, expected option
life and the future price volatility of the underlying security which can vary from actual future events.
The factors applied in the calculation are managements best estimates based on historical information
and future forecasts.
Fair value of contingent consideration
When consideration transferred relating to an acquisition includes consideration contingent on future
events, the Company is required to estimate the fair value of the contingent consideration and record a
contingent consideration liability. The fair value of such consideration is based on assumptions and
judgements regarding the likelihood of future events.
Deferred income taxes
Deferred tax assets are recognized when it is considered probable that deductible temporary
differences will be recovered in the foreseeable future. To the extent that future taxable income and
the application of existing tax laws in each jurisdiction differ significantly from the Companys
estimate, the ability of the Company to realize the deferred tax assets could be impacted.
New Accounting Pronouncements
The following pronouncements and amendments are effective for annual periods beginning on or after
January 1, 2013 unless otherwise stated. Adopting these standards is expected to have minimal or no
impact on the consolidated financial statements.
IFRS 10 Consolidation replaces SIC-12 Consolidation Special Purpose Entities and parts of IAS
27 Consolidated and Separate Financial Statements and requires an entity to consolidate an investee
when it is exposed, or has rights, to variable returns from its involvement with the investee and has the
ability to affect those returns through its power over the investee.
IFRS 11 Joint Arrangements requires a venturer to classify its interest in a joint arrangement as a
joint venture or joint operation. Joint ventures will be accounted for using the equity method of
accounting whereas joint operations, the venturer will recognize its share of the assets, liabilities,
revenue and expenses of the joint operation. IFRS 11 supersedes IAS 31 Interests in Joint Ventures,
and SIC-13 Jointly Controlled Entities Non-monetary Contributions by Venturers.
IFRS 12 Disclosure of Interest in Other Entities establishes disclosure requirements for interests in
other entities, such as joint arrangements, associates, and special purpose vehicles and off balance
sheet vehicles. The standard carries forward existing disclosures and also introduces additional
disclosures addressing the nature of, and risks associated with, an entitys interests in other entities.
ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 16

IFRS 13 Fair Value Measurement is a comprehensive standard that defines fair value, requires
disclosure about fair value measurement and provides a framework for measuring fair value when it is
required or permitted within the IFRS standards.
IAS 27 Separate Financial Statement addresses accounting for subsidiaries, jointly controlled entities
and associates in non-consolidated financial statements.
IAS 28 Investments in Associates and Joint Ventures has been amended to include joint ventures in
its scope and to address the changes in IFRS 10 13.
IAS 1 Presentation of Financial Statements amendment requires components of other comprehensive
income to be separately presented between those that may be reclassified to income and those that will
not. The amendments are effective for annual periods beginning on or after July 1, 2012.
IAS 32 Financial Instruments: Presentation amendment provides clarification on the application of
offsetting rules. The amendments are effective for annual periods beginning on or after July 1, 2012.
Disclosure Controls and Procedures and Internal Controls Over Financial Reporting
Antrim has established disclosure controls, procedures and corporate policies so that its consolidated
financial results are presented accurately, fairly and on a timely basis. The Chief Executive Officer
and Chief Financial Officer have designed or have caused such internal controls over financial
reporting to be designed under their supervision to provide reasonable assurance regarding the
reliability of financial reporting and preparation of the Companys financial statements in accordance
with IFRS. The Company tested and evaluated the effectiveness of its disclosure controls and
procedures and internal controls over financial reporting as at December 31, 2012. During this
evaluation the Corporation identified a weakness due to the limited number of finance and accounting
personnel at the Corporation dealing with complex and non-routine accounting transactions that may
arise.
There were no changes in the Companys internal controls over financial reporting that occurred
during 2012 that have materially affected, or are reasonably likely to materially affect, the Companys
internal controls over financial reporting.
All internal control systems, no matter how well designed, have inherent limitations. Therefore, these
systems provide reasonable but not absolute assurance that financial information is accurate and
complete.
Related Party and Off-Balance Sheet Transactions
Antrim may from time to time enter into arrangements with related parties. In 2012, Antrim incurred
fees of $421,607 (2011 - $266,741) payable to Burstall Winger LLP, a law firm in which a director of
the Company is a partner. The Company had no off-balance sheet transactions in the year ended
December 31, 2012.
ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 17

Forward-Looking Statements
This MD&A and any documents incorporated by reference herein contain certain forward-looking
statements and forward-looking information which are based on Antrim's internal reasonable
expectations, estimates, projections, assumptions and beliefs as at the date of such statements or
information. Forward-looking statements often, but not always, are identified by the use of words
such as seek, anticipate, believe, plan, estimate, expect, targeting, forecast, achieve
and intend and statements that an event or result may, will, should, could or might occur
or be achieved and other similar expressions. These statements are not guarantees of future
performance and involve known and unknown risks, uncertainties, assumptions and other factors that
may cause actual results or events to differ materially from those anticipated in such forward-looking
statements and information. Antrim believes that the expectations reflected in those forward-looking
statements and information are reasonable but no assurance can be given that these expectations will
prove to be correct and such forward-looking statements and information included in this MD&A and
any documents incorporated by reference herein should not be unduly relied upon. Such forwardlooking statements and information speak only as of the date of this MD&A or the particular
document incorporated by reference herein and Antrim does not undertake any obligation to publicly
update or revise any forward-looking statements or information, except as required by applicable laws.
In particular, this MD&A and any documents incorporated by reference herein, contain specific
forward-looking statements and information pertaining to the quantity of and future net revenues from
Antrim's reserves of oil, natural gas liquids (NGL) and natural gas production levels. This MD&A
may also contain specific forward-looking statements and information pertaining to Antrims plans for
developing its licences, expected production rates and future development plans with respect to
Cormorant East and future development plans for the Causeway Field, commodity prices, foreign
currency exchange rates and interest rates, capital expenditure programs and other expenditures,
supply and demand for oil, NGLs and natural gas, expectations regarding Antrim's ability to raise
capital, to continually add to reserves through acquisitions and development, the schedules and timing
of certain projects, Antrim's strategy for growth, Antrim's future operating and financial results,
treatment under governmental and other regulatory regimes and tax, environmental and other laws.
With respect to forward-looking statements contained in this MD&A and any documents incorporated
by reference herein, Antrim has made assumptions regarding Antrim's ability to obtain additional
drilling rigs and other equipment in a timely manner, obtain regulatory approvals, future oil and
natural gas production levels from Antrim's properties and the price obtained from the sales of such
production, the level of future capital expenditure required to exploit and develop reserves, the ability
of Antrims partners to meet their commitments as they relate to the Company and Antrims reliance
on industry partners for the development of some of its properties, Antrims ability to obtain financing
for future Fyne development on acceptable terms, the general stability of the economic and political
environment in which Antrim operates and the future of oil and natural gas pricing. In respect to these
assumptions, the reader is cautioned that assumptions used in the preparation of such information may
prove to be incorrect.
Antrim's actual results could differ materially from those anticipated in these forward-looking
statements and information as a result of assumptions proving inaccurate and of both known and
unknown risks, including risks associated with the exploration for and development of oil and natural
ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 18

gas reserves such as the risk that drilling operations may not be successful, unanticipated delays with
respect to the development of Antrims properties, operational risks and liabilities that are not covered
by insurance, volatility in market prices for oil, NGLs and natural gas, changes or fluctuations in oil,
NGLs and natural gas production levels, changes in foreign currency exchange rates and interest rates,
the ability of Antrim to fund its substantial capital requirements and operations and to repay its
obligations under the Payment Swap and Brent Oil Price Commodity Swap. Antrims reliance on
industry partners for the development of some of its properties, risks associated with ensuring title to
the Companys properties, liabilities and unexpected events inherent in oil and gas operations,
including geological, technical, drilling and processing problems the risk of adverse results from
litigation, the accuracy of oil and gas reserve estimates and estimated production levels as they are
affected by the Antrims exploration and development drilling and estimated decline rates, in
particular the future production rates at the Causeway and Cormorant East Fields in the UK North Sea.
Additional risks include the ability to effectively compete for, among other things, capital, acquisitions
of reserves, undeveloped lands and skilled personnel, incorrect assessments of the value of
acquisitions, Antrim's success at acquisition, exploitation and development of reserves, changes in
general economic, market and business conditions in Canada, North America, the United Kingdom,
Europe and worldwide, actions by governmental or regulatory authorities including changes in income
tax laws or changes in tax laws, royalty rates and incentive programs relating to the oil and gas
industry and more specifically, changes in environmental or other legislation applicable to Antrim's
operations, and Antrim's ability to comply with current and future environmental and other laws,
adverse regulatory rulings, order and decisions and risks associated with the nature of the Common
Shares.
Many of these risk factors, other specific risks, uncertainties and material assumptions are discussed in
further detail throughout this MD&A and in Antrim's annual information form for the year ended
December 31, 2012. Readers are specifically referred to the risk factors described in this MD&A
under Risk Factors and in other documents Antrim files from time to time with securities regulatory
authorities. Copies of these documents are available without charge from Antrim or electronically on
the internet on Antrim's SEDAR profile at www.sedar.com. Readers are cautioned that this list of risk
factors should not be construed as exhaustive.
The calculation of barrels of oil equivalent (boe) is based on a conversion rate of six thousand cubic
feet of natural gas (mcf) to one barrel of crude oil (bbl). Boes may be misleading, particularly if
used in isolation. A boe conversion ratio of 6 mcf: 1 bbl is based on an energy equivalency conversion
method primarily applicable at the burner tip and does not represent a value equivalency at the
wellhead.
In accordance with AIM guidelines, Mr. Kerry Fulton, P. Eng and Vice President, Operations for
Antrim, is the qualified person that has reviewed the technical information contained in this MD&A.
Mr. Fulton has over 30 years operating experience in the upstream oil and gas industry.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 19

MANAGEMENTS RESPONSIBILITY FOR FINANCIAL REPORTING

The accompanying consolidated financial statements are the responsibility of management. The
consolidated financial statements have been prepared by management in accordance with International
Financial Reporting Standards outlined in the notes to the consolidated financial statements. The
consolidated financial statements include certain estimates that reflect the managements best
judgments. Management has determined such amounts on a reasonable basis in order to ensure that the
consolidated financial statements are presented fairly, in all material respects. In the opinion of
management, the consolidated financial statements have been prepared within acceptable limits of
materiality and are in accordance with International Financial Reporting Standards. The financial
information contained in the annual report is consistent with that in the consolidated financial
statements.
Management is also responsible for establishing and maintaining appropriate systems of internal
control over the companys financial reporting. The internal control system was designed to provide
reasonable assurance to management regarding the preparation and presentation of the consolidated
financial statements. Management tested and evaluated the effectiveness of its disclosure controls and
procedures and internal controls over financial reporting as at December 31, 2012. During this
evaluation Management identified a weakness due to the limited number of finance and accounting
personnel at the Corporation dealing with complex and non-routine accounting transactions that may
arise. All internal control systems, no matter how well designed, have inherent limitations. Therefore,
these systems provide reasonable but not absolute assurance that financial information is accurate and
complete.
PricewaterhouseCoopers LLP, an independent firm of Chartered Accountants, has been engaged, as
approved by a vote of the shareholders at the Companys most recent annual general meeting, to
examine the consolidated financial statements in accordance with Canadian generally accepted
auditing standards and provide an independent professional opinion.
The audit committee of the Board of Directors with all of its members being independent directors,
have reviewed the consolidated financial statements including notes thereto, with management and
PricewaterhouseCoopers LLP. The consolidated financial statements have been approved by the Board
of Directors on the recommendation of the audit committee.

(signed) Stephen Greer


Stephen Greer
President & Chief Executive Officer

(signed) Anthony Potter


Anthony Potter
Chief Financial Officer

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 20

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 21

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 22

Antrim Energy Inc.


Consolidated Balance Sheets
As at December 31, 2012 and 2011
(Amounts in US$ thousands)

Note
Assets
Current assets
Cash and cash equivalents
Restricted cash
Accounts receivable
Inventory and prepaid expenses
Assets held for sale

Property, plant and equipment


Exploration and evaluation assets

7
8

Liabilities
Current liabilities
Accounts payable and accrued liabilities
Deferred revenue
Liabilities held for sale

9
4

Decommissioning obligations
Contingent consideration

10
11

Commitments and contingencies


Subsequent events

21
24

6
4

Shareholders' equity
Share capital
Contributed surplus
Accumulated other comprehensive income (loss)
Deficit

12

The accompanying notes are an integral part of the consolidated financial statements.

Approved on behalf of the Board of Directors of Antrim Energy Inc.:


(signed) Gerry Orbell
Director

(signed) James Smith


Director

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 23

December 31
2012

December 31
2011

1,503
808
332
5,877
8,520

47,105
17,249
5,294
240
31,651
101,539

81,069
6,931
96,520

15,207
122,431
239,177

18,165
1,089
19,254

17,214
4,180
21,394

10,270
29,524

3,595
7,000
31,989

361,922
20,626
4,656
(320,208)
66,996
96,520

361,587
19,579
(5,971)
(168,007)
207,188
239,177

Antrim Energy Inc.


Consolidated Statements of Comprehensive Loss
For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except per share data)

Note
Revenue
Expenses
General and administrative expenses
Depreciation
Share-based compensation
Exploration and evaluation expenditures
Impairment
Change in fair value of contingent consideration
Reduction in the fair value of financial assets
Gain on disposal of Argentina assets
Loss on disposal
Financial items
Finance income
Finance costs
Foreign exchange loss
Loss from continuing operations before income taxes
Income tax expense
Loss from continuing operations after income taxes
Income from discontinued operations
Net loss for the year
Other comprehensive (income) loss
Foreign currency translation adjustment
Foreign currency translation adjustment disposal of assets
Other comprehensive (income) loss for the year
Comprehensive loss for the year
Net loss (income) per common share
Basic & diluted continuing operations
Basic & diluted discontinued operations

2012

2011

15

16
7
13

5,843
94
998
7,640
122,698
(7,000)
10,040
(5,894)
134,419

5,004
191
883
273
49,101
(1,000)
70
54,522

(276)
213
503
134,859
134,859
(315)
134,544

(706)
586
708
55,110
55,110
(2,140)
52,970

(7,414)
(3,213)
(10,627)
123,917

4,123
(2,271)
1,852
54,822

0.73
(0.00)

0.32
(0.01)

7, 8
11
4
4

17
18

20
4

14
14

The accompanying notes are an integral part of the consolidated financial statements.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 24

Antrim Energy Inc.


Consolidated Statements of Cash Flows
For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands)
Note
Operating Activities
Loss from continuing operations after income taxes
Items not involving cash:
Depreciation
Share-based compensation
Accretion of decommissioning obligations
Foreign exchange loss
Impairment
Change in the fair value of contingent consideration
Reduction in the fair value of financial assets
Gain on disposal of Argentina assets
Loss on disposal
Changes in non-cash working capital items continuing operations

2012

2011

(134,859)

(55,110)

94
998
145
390
122,698
(7,000)
10,040
(5,894)
4,717

191
883
209
1,909
49,101
(1,000)
70
12,688

(8,671)

8,941

(365)
(9,036)

(1,204)
7,737

12
12

186
-

52,431
(2,998)

186

49,433

(63,034)
16,441
9,976
(36,617)
(1,121)
(37,738)

(14,702)
(17,249)
(31,951)
(2,372)
(34,323)

986

(1,392)

(45,602)
47,105

21,455
25,650

1,503

47,105

7
13
10
7, 8
11
4
4

Cash (used in) provided by operating activities continuing


operations
Cash used in operating activities discontinued operations
Cash (used in) provided by operating activities
Financing Activities
Issue of common shares
Share issue expenses

19

Cash provided by financing activities


Investing Activities
Capital expenditures
Restricted cash
Cash proceeds from the disposal of Argentina assets
Cash used in investing activities continuing operations
Cash used in investing activities discontinued operations
Cash used in investing activities

5
4
4

Effect of foreign exchange on cash and cash equivalents


Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents beginning of year
Cash and cash equivalents end of year

19

The accompanying notes are an integral part of the consolidated financial statements.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 25

Antrim Energy Inc.


Consolidated Statements of Changes in Equity
For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands)
Share capital
Number of

Accumulated other

common
Note
Balance, December 31, 2010

shares

Amount

Contributed

comprehensive

surplus

income (loss)

135,571,542

312,062

18,377

Net loss for the year

Other comprehensive loss

Deficit

Total

(4,119)

(115,037)

211,283

(52,970)

(52,970)

(1,852)

(1,852)

Issuance of common shares

12

48,191,700

52,297

52,297

Share issuance costs

12

(2,998)

(2,998)

Share-based compensation

13

1,294

1,294

352,836

226

(92)

134

Balance, December 31, 2011

184,116,078

361,587

19,579

(5,971)

(168,007)

207,188

Balance, December 31, 2011

184,116,078

361,587

19,579

(5,971)

(168,007)

207,188

(134,544)

(134,544)

(17,657)

(17,657)

10,627

10,627

Stock options exercised

Net loss for the year


Capital distribution

Other comprehensive income


Share-based compensation
Stock options exercised
Balance, December 31, 2012

13

1,196

1,196

614,998

335

(149)

186

184,731,076

361,922

20,626

4,656

(320,208)

66,996

The accompanying notes are an integral part of the consolidated financial statements.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 26

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
1) Nature of Operations
Antrim Energy Inc. (Antrim or the Company) is a Calgary based oil and natural gas company.
Through subsidiaries, the Company conducts exploration activities in the United Kingdom and
Ireland. Antrim Energy Inc. is incorporated and domiciled in Canada. The Companys common
shares are listed on the Toronto Stock Exchange (TSX) and the London Alternative Investment
Market (AIM) under the symbols AEN and AEY, respectively. The address of its registered
office is 1600, 333 7th Avenue S.W, Calgary, Alberta, Canada.
2) Basis of Presentation
a) Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).
The policies applied in these consolidated financial statements are based on IFRS issued and
outstanding as at March 26, 2013, the date the Board of Directors approved the year ended
consolidated financial statements.
The consolidated financial statements have been prepared on the historical cost basis, except as
explained in Note 3, Summary of Significant Accounting Policies. The accounting policies
described in Note 3 have been applied consistently to all periods presented in these financial
statements. Historical cost is generally based on the fair value of the consideration given in
exchange for the assets.
b) Presentation currency
In these consolidated financial statements, unless otherwise indicated, all dollar amounts are
expressed in United States (US) dollars. Antrims functional currency is Canadian dollars;
however, the Company has adopted the US dollar as its presentation currency to facilitate a more
direct comparison to North American oil and gas companies with international operations.
c) Critical accounting judgments and key sources of estimation uncertainty
In the application of the Companys accounting policies, management is required to make
judgments, estimates and assumptions about carrying values of assets and liabilities that are not
readily apparent from other sources. The estimates and underlying assumptions are reviewed on an
ongoing basis. The estimates and associated assumptions are based on historical experience and
other factors, including expectations of future events that are believed to be reasonable under the
circumstances. Actual results may differ from these estimates.
The following are the critical judgments and estimates that management has made in the process of
applying the Companys accounting policies and that have the most significant effect on the amounts
recognized in the financial statements:

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 27

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
Estimation of reserve quantities
Depletion, impairment and decommissioning charges are dependent on the Companys estimate of
oil and gas reserves. The estimation of reserves is an inherently complex process and involves the
exercise of professional judgment. Reserves have been evaluated at the balance sheet date by an
independent qualified reserve evaluator in accordance with National Instrument 51-101 Standards of
Disclosure for Oil and Gas Activities and are based on the definitions and guidelines contained in the
Canadian Oil and Gas Evaluation Handbook.
Oil and gas reserve estimates are based on a range of geological, technical and economic factors
including projected future rates of production, estimated commodity prices, engineering data, reserve
type and timing and amount of future expenditures, all of which are subject to uncertainty.
Assumptions reflect market and regulatory conditions existing at the balance sheet date, which could
differ significantly from other points in time throughout the year, or future periods. Changes in
market and regulatory conditions and assumptions can materially impact the estimation of net
reserves.
Recoverability of exploration and evaluation costs
Exploration and evaluation costs are initially capitalized with the intent to establish commercially
viable reserves. The Company is required to make estimates and judgments about future events and
circumstances regarding the economic viability of extracting the underlying resources. The costs are
subject to technical, commercial and management review to confirm the continued intent to develop
and extract the underlying resources. Fluctuations in future commodity prices, resource quantities,
expected production techniques, drilling results, production costs and required capital expenditures
are important factors when making this determination. If a judgment is made that extraction of the
reserves is not viable, the exploration and evaluation costs will be written off to net earnings.
Decommissioning obligations
The Company recognizes liabilities for the future decommissioning and restoration of property, plant
and equipment. These provisions are based on estimated costs, which take into account the
anticipated method and extent of restoration consistent with legal requirements, technological
advances and the possible use of the site. Actual costs are uncertain and estimates can vary as a
result of changes to relevant laws and regulations, the emergence of new technology, operating
experience and prices. The actual timing of future decommissioning and restoration is not known
and may change due to certain factors, including reserve life. Changes to assumptions made about
future expected costs, discount rates, inflation and timing may have a material impact on the
amounts presented. The Company has chosen to measure decommissioning obligations using a riskfree discount rate.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 28

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
Impairment of property, plant and equipment
The recoverable amounts of cash-generating units (CGUs) and individual assets have been
determined based on greater of value-in-use or fair value less costs to sell calculations. The key
assumptions the Company uses in estimating future cash flows for purposes of calculating value-in
use or fair value less costs to sell are future oil prices, expected production volumes, future
development costs, operating costs and the discount rate applied to reflect the time value of money.
Changes to these assumptions will affect the recoverable amounts of cash-generating units and
individual assets and may then require a material adjustment to their related carrying value.
The determination of CGUs requires judgement in defining a group of assets that generate cash
inflows that are largely independent of the cash inflows from other assets or groups of assets. CGUs
are determined by similar geological structure, shared infrastructure, geographical proximity,
commodity type, similar exposure to market risks and materiality.
Fair value of share-based compensation
The fair value of share-based compensation is calculated using a Black-Scholes option-pricing
model. There are a number of estimates used in the calculation such as future forfeiture rate,
expected option life and the future price volatility of the underlying security which can vary from
actual future events. The factors applied in the calculation are managements best estimates based
on historical information and future forecasts.
Fair value of contingent consideration
When consideration transferred relating to an acquisition includes consideration contingent on future
events, the Company is required to estimate the fair value of the contingent consideration and
records a contingent consideration liability. The fair value of such consideration is based on
assumptions and judgements regarding the likelihood of future events.
Deferred income taxes
Deferred tax assets are recognized when it is considered probable that deductible temporary
differences will be recovered in the foreseeable future. To the extent that future taxable income and
the application of existing tax laws in each jurisdiction differ significantly from the Companys
estimate, the ability of the Company to realize the deferred tax assets could be impacted.
3) Summary of Significant Accounting Policies
The following significant accounting policies have been adopted in the preparation and presentation
of the consolidated financial statements:
a) Basis of consolidation
These consolidated financial statements incorporate the financial statements of the Company and
entities controlled by the Company. Control is achieved where the Company has the power to
govern the financial and operating policies of the entity so as to obtain benefits from its activities.
The financial statements of subsidiaries are included in the consolidated financial statements from
ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 29

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
the date that control commences until the date that control ceases. All intra-company transactions,
balances, income and expenses are eliminated on consolidation.
b) Foreign currency translation
In preparing the financial statements of the Companys subsidiaries, transactions in currencies other
than the entitys functional currency are recorded at the rates of exchange prevailing on the date of
the transaction. Monetary assets and liabilities denominated in foreign currencies are translated to
the appropriate functional currency at foreign exchange rates at the balance sheet date. Foreign
exchange differences arising on translation are recognized in earnings. Non-monetary assets that are
measured at historical cost in a foreign currency are translated using the exchange rate at the date of
the transactions.
In preparing the Companys consolidated financial statements, the financial statements of each entity
are first translated into Canadian dollars, the functional currency of the Company. The consolidated
financial statements of the Company are then translated into U.S. dollars, the Companys
presentation currency. The assets and liabilities of foreign operations are translated into Canadian
dollars at exchange rates at the balance sheet date. Revenues and expenses of foreign operations are
translated into Canadian dollars using foreign exchange rates that approximate those on the date of
the underlying transaction. Foreign exchange differences are recognized in other comprehensive
income and reclassified to net earnings upon disposal of the foreign operation.
c) Jointly controlled operations and jointly controlled assets
A significant portion of the Companys operations are conducted with others and involve jointly
controlled assets. The consolidated financial statements reflect only the Companys interest in such
activities and assets.
d) Oil and natural gas exploration and evaluation expenditures
Pre-licence costs
Costs incurred prior to obtaining the legal right to explore for hydrocarbon resources are expensed in
the period in which they are incurred.
Exploration and evaluation costs
Exploration and evaluation assets are stated at cost, less accumulated impairment losses.
Once the legal right to explore has been acquired, costs directly associated with an exploration well
are capitalized as exploration and evaluation assets until the drilling of the well is complete and the
results have been evaluated. These costs include licence costs, geological and geophysical costs,
employee remuneration, materials and fuel used, rig costs and payments made to contractors. If no
reserves are found, the exploration asset is tested for impairment. If extractable hydrocarbons are
found and, subject to further appraisal activity (e.g. by drilling further wells), are likely to be
developed commercially, the costs continue to be carried as exploration and evaluation assets while
sufficient and continued progress is made in assessing the commerciality of the hydrocarbons. All
ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 30

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
such costs are subject to technical, commercial and management review as well as review for
impairment indicators at each period end to confirm the continued intent to develop or otherwise
extract value from the discovery. When this is no longer the case, the costs are written off. When
proved and probable reserves of oil are determined and development is sanctioned, the relevant
expenditure is transferred to oil and gas properties after impairment is assessed and any resulting
impairment loss is recognized.
e) Property, plant and equipment
Property, plant and equipment are stated at cost, less accumulated depreciation and accumulated
impairment losses.
The initial cost of an asset comprises its purchase price or construction cost, any costs directly
attributable to bringing the asset into operation, the initial estimate of the decommissioning
obligations and borrowing costs for qualifying assets. Expenditures on the construction, installation
or completion of infrastructure facilities such as platforms, pipelines and the drilling and completion
of development wells, including unsuccessful development or delineation wells, is capitalized within
property, plant and equipment. The purchase price or construction cost is the aggregate amount paid
and the fair value of any other consideration given to acquire the asset. The capitalized value of a
finance lease is also included within property, plant and equipment.
Depletion and depreciation
Oil and gas assets within property, plant and equipment are depleted on a unit-of-production basis
over the proved and probable reserves of the field concerned. The unit-of-production rate for the
amortization of field development costs takes into account expenditures incurred to date, together
with sanctioned future development expenditure.
Other property, plant and equipment are generally depreciated on a straight-line basis over its
estimated useful lives, as follows:
Office equipment
Computer hardware and software

5 years
3 years

f) Impairment of non-financial assets


The Company assesses at each reporting date whether there is an indication that an asset may be
impaired. If any indication exists the Company estimates the assets recoverable amount. An assets
recoverable amount is the higher of an assets or CGUs fair value less costs to sell and its value-inuse and is determined for an individual asset, unless the asset does not generate cash inflows that are
largely independent of those from other assets or groups of assets. If the carrying amount of an asset
or CGU exceeds its recoverable amount, the asset or CGU is considered impaired and is written
down to its recoverable amount. In assessing value-in-use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current market
assessments of the time value of money and the risks specific to the asset. In determining fair value

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 31

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
less costs to sell, recent market transactions are taken into account, if available. If no such
transactions can be identified, an appropriate valuation model is used. These calculations are
corroborated by valuation multiples or other available fair value indicators.
Impairment losses are recognized in the consolidated statement of loss and comprehensive loss.
An assessment is made at each reporting date as to whether there is any indication that previously
recognized impairment losses may no longer exist or may have decreased. If such indication exists,
the Company estimates the assets or cash-generating units recoverable amount. A previously
recognized impairment loss is reversed only if there has been a change in the assumptions used to
determine the assets recoverable amount since the last impairment loss was recognized.
The reversal is limited so that the carrying amount of the asset does not exceed its recoverable
amount, nor exceed the carrying amount that would have been determined, net of depreciation, had
no impairment loss been recognized for the asset in prior years.
g) Financial assets
Financial assets are measured at fair value on the balance sheet upon initial recognition of the
instrument. Subsequent measurement and changes in fair value will depend on initial classification,
as follows:
(i)
fair value through profit or loss financial assets and liabilities, classified as held for
trading or designated as fair value through profit or loss, are measured at fair value and
subsequent changes in fair value are recognized in income;
(ii)
loans and receivables are non-derivative financial assets with fixed or determinable
payments that are not quoted in an active market;
(iii)
available-for-sale financial instruments are measured at fair value with changes in fair
value recorded in equity until the instrument or a portion thereof is derecognized or
impaired at which time the amounts would be recognized in income; and
(iv)
held to maturity financial assets and loans and receivables are initially measured at fair
value with subsequent measurement at amortized cost using the effective interest rate
method. The effective interest rate method calculates the amortized cost of a financial
asset and allocates interest income or expense over the applicable period. The rate used
discounts the estimated future cash flows over either the expected life of the financial
asset or liability or a shorter time-frame if its deemed appropriate.
Antrims current classifications are as follows:
(i)
cash and cash equivalents are designated as loans and receivables,
(ii)
restricted cash is designated as loans and receivables; and
(iii)
accounts receivable are designated as loans and receivables.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 32

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
h) Financial liabilities
Financial liabilities within the scope of IAS 39 Financial Instruments: Recognition and
Measurement (IAS 39) are classified as financial liabilities at fair value through profit or loss or as
other financial liabilities at amortized cost, as appropriate. The Company determines the
classification of its financial liabilities at initial recognition.
All financial liabilities are recognized initially at fair value and in the case of loans and borrowings,
plus directly attributable transaction costs. The Companys financial liabilities include accounts
payables and contingent consideration.
Derecognition
A financial liability is derecognized when the obligation under the liability is discharged, cancelled
or expires.
i)

Cash and cash equivalents


Cash and cash equivalents include cash on hand, deposits held with banks, and other short-term
highly liquid investments with original maturities of three months or less.

j) Inventories
Inventories are stated at the lower of cost and net realizable value. The cost of crude oil is the cost to
produce, including the appropriate proportion of depletion and depreciation and overheads, including
all costs incurred in the normal course of business in bringing each product to its present location
and condition, and is accounted on a weighted average basis. Net realizable value of crude oil and
refined products is based on estimated selling price in the ordinary course of business less any
expected selling costs.
k) Assets held for sale
Non-current assets, or disposal groups consisting of assets and liabilities, are classified as held for
sale if their carrying amounts will be recovered through a sale transaction rather than through
continuing use. This condition is met when the sale is highly probably and the asset is available for
immediate sale in its present condition.
Non-current assets classified as held for sale are measured at the lower of the carrying amount and
fair value less costs to sell, with impairments recognized in net earnings in the period measured.
Non-current assets and disposal groups held for sale are presented in current assets and liabilities
within the consolidated balance sheet. Assets held for sale are not depreciated, depleted or
amortized.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 33

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
l)

Provisions
General
Provisions are recognized when the Company has a present obligation (legal or constructive) as a
result of a past event, it is probable that an outflow of resources embodying economic benefits will
be required to settle the obligation and a reliable estimate can be made of the amount of the
obligation. Where the Company expects some or all of a provision to be reimbursed, for example,
under an insurance contract, the reimbursement is recognized as a separate asset but only when the
reimbursement is virtually certain. The expense relating to any provision is presented in the income
statement net of any reimbursement. If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects, where appropriate, the risks specific to the
liability. Where discounting is used, the increase in the provision due to the passage of time is
recognized as a finance cost.
Decommissioning obligations
Decommissioning obligations are recognized when the Company has a present legal or constructive
obligation as a result of past events, it is probable that an outflow of resources will be required to
settle the obligation and a reliable estimate of the amount of obligation can be made. A
corresponding amount equivalent to the provision is also recognized as part of the cost of the
relevant asset category to which they relate. The amount recognized is the estimated cost of
decommissioning, discounted to its present value using a risk-free interest rate.
Changes in the estimated timing or cost of decommissioning are dealt with prospectively by
recording an adjustment to the provision, and a corresponding adjustment to the relevant asset
category. The unwinding of the discount on the decommissioning obligations is included as a
finance cost.

m) Taxes
Current income tax
Current income tax assets and liabilities are measured at the amount expected to be recovered from
or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those
that are enacted or substantively enacted, by the reporting date, in the countries where the Company
operates and generates taxable income.
Current income tax relating to items recognized directly in equity is recognized in equity and not in
the income statement. Management periodically evaluates positions taken in the tax returns with
respect to situations in which applicable tax regulations are subject to interpretation and establishes
provisions where appropriate.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 34

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
Deferred tax
The Company follows the liability method of accounting for income taxes. Under this method,
income tax assets and liabilities are recognized for the estimated tax consequences attributable to
differences between the amounts reported in the financial statements and their respective tax bases,
using enacted or substantially enacted tax rates expected to apply when the asset is realized or the
liability settled. Deferred tax assets are only recognized to the extent it is more likely than not that
sufficient future taxable income will be available to allow the future income tax asset to be realized.
n) Revenue recognition
Revenue is recognized when it is probable that the economic benefits associated with a transaction
will flow to the Company and the amount of the revenue can be measured reliably and collectability
is reasonably assured. In particular, revenue from the production and sale of crude oil is recognized
when the title has been transferred to customers, which is when risk and rewards pass to the
customer. This occurs when product is physically transferred into a shipping vessel.
Deferred revenue is recognized when cash is received and no crude oil has been lifted from the
terminal therefore title and risk has not been transferred to the buyer.
For all financial instruments measured at amortized cost and interest bearing financial assets
classified as available-for-sale, interest income or expense is recorded using the effective interest
rate, which is the rate that exactly discounts the estimated future cash payments or receipts through
the expected life of the financial instrument or a shorter period, where appropriate, to the net
carrying amount of the financial asset or liability. Interest income is included in finance income in
the income statement.
o) Share-based compensation
Equity-settled share-based compensation to directors, employees and others providing similar
services are measured at the fair value of the equity instruments at the grant date.
The fair value determined at the grant date of the equity-settled share-based compensation is
expensed on a graded basis over the vesting period, based on the Companys estimate of equity
instruments that will eventually vest. At the end of each reporting period, the Company revises its
estimate of the number of equity instruments expected to vest. The impact of the revision of the
original estimates, if any, is recognized in profit or loss such that the cumulative expense reflects the
revised estimate, with a corresponding adjustment to contributed surplus.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 35

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
p) Earnings (loss) per share
Basic earnings (loss) per share is computed by dividing the net earnings (loss) available to common
shareholders by the weighted average number of shares outstanding during the reporting year.
Diluted earnings (loss) per share is computed in a similar way to basic earnings (loss) per share
except that the weighted average shares outstanding are increased to include additional shares for the
assumed exercise of stock options and warrants, if dilutive. The number of additional shares is
calculated by assuming that outstanding stock options were exercised and that the proceeds from
such exercises were used to acquire common stock at the average market price during the reporting
periods.
q) Share capital
Common shares are classified as equity. Incremental costs directly attributable to the issuance of
shares are recognized as a deduction from equity.
r) Standards issued but not yet effective
The following pronouncements and amendments are effective for annual periods beginning on or
after January 1, 2013 unless otherwise stated. Adopting these standards is expected to have minimal
or no impact on the consolidated financial statements.
IFRS 10 Consolidation replaces SIC-12 Consolidation Special Purpose Entities and parts of IAS
27 Consolidated and Separate Financial Statements and requires an entity to consolidate an investee
when it is exposed, or has rights, to variable returns from its involvement with the investee and has
the ability to affect those returns through its power over the investee.
IFRS 11 Joint Arrangements requires a venturer to classify its interest in a joint arrangement as a
joint venture or joint operation. Joint ventures will be accounted for using the equity method of
accounting whereas joint operations, the venturer will recognize its share of the assets, liabilities,
revenue and expenses of the joint operation. IFRS 11 supersedes IAS 31 Interests in Joint Ventures,
and SIC-13 Jointly Controlled Entities Non-monetary Contributions by Venturers.
IFRS 12 Disclosure of Interest in Other Entities establishes disclosure requirements for interests in
other entities, such as joint arrangements, associates, and special purpose vehicles and off balance
sheet vehicles. The standard carries forward existing disclosures and also introduces additional
disclosures addressing the nature of, and risks associated with, an entitys interests in other entities.
IFRS 13 Fair Value Measurement is a comprehensive standard that defines fair value, requires
disclosure about fair value measurement and provides a framework for measuring fair value when it
is required or permitted within the IFRS standards.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 36

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
IAS 27 Separate Financial Statement addresses accounting for subsidiaries, jointly controlled
entities and associates in non-consolidated financial statements.
IAS 28 Investments in Associates and Joint Ventures has been amended to include joint ventures
in its scope and to address the changes in IFRS 10 13.
IAS 1 Presentation of Financial Statements amendment requires components of other
comprehensive income to be separately presented between those that may be reclassified to income
and those that will not. The amendments are effective for annual periods beginning on or after July
1, 2012.
IAS 32 Financial Instruments: Presentation amendment provides clarification on the application of
offsetting rules. The amendments are effective for annual periods beginning on or after January 1,
2014.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 37

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
4) Discontinued operations
The Company entered into an agreement on March 23, 2012 to sell all of its interest in its wholly
owned subsidiary Antrim Argentina S.A. to Crown Point Energy Inc. (Crown Point) (formerly
known as Crown Point Ventures Ltd.) by way of a plan of arrangement (the Arrangement). The
consideration consisted of Cdn $10,262 in cash (subject to certain adjustments) and 35,761,290
common shares of Crown Point (Crown Point Shares). Pursuant to the Arrangement, Antrim
would distribute the Crown Point Shares to its shareholders.
On May 28, 2012, Antrim completed the sale of Antrim Argentina S.A. to Crown Point. Under the
terms of the Arrangement, the Company received a cash payment of $9,976 (Cdn $10,262) and
35,761,290 Crown Point Shares. The actual cash payment received was netted against adjustments
of $1,015 (Cdn $1,016) which have been recognized as sale transaction costs. These sale transaction
costs, along with costs of $1,886 incurred by the Company, have been offset against income from
discontinued operations.
Details of the disposition are as follows:
2012
Consideration received:
Cash
Crown Point Shares (based on a May 28, 2012 share price of Cdn $0.80)
Carrying value of assets and liabilities disposed:
Working capital
Property, plant and equipment
Exploration and evaluation assets
Other non-current assets
Decommissioning obligations
Total carrying value of assets and liabilities disposed
Gain on disposal excluding foreign currency translation adjustment
Foreign currency translation adjustment relating to disposal
Gain on disposal after foreign currency translation adjustment

9,976
27,811
37,787
9,388
19,886
719
1,189
(2,502)
28,680
9,107
(3,213)
5,894

Antrim distributed the Crown Point Shares to its shareholders on June 7, 2012 (the Distribution
Date). On the Distribution Date, Crown Points closing share price on the TSX Venture Exchange
was Cdn $0.51 which had decreased from the May 28, 2012 closing share price of Cdn $0.80. This
reduction in Crown Points share price resulted in the Company recognizing a capital loss on the
Crown Point Shares of $10,040. This amount has been recognized on the consolidated statement of
comprehensive loss as a reduction in the fair value of financial assets. A capital distribution of
$17,657 has been recorded in deficit on the statement of changes in equity.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 38

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
The combined results of the discontinued operations have been included in the consolidated statement
of comprehensive loss. The comparative period income and cash flows from discontinued operations
have been reclassified to include those operations classified as discontinued in the current year.
The year ended December 31, 2012 discontinued financial and operating results include only those
results up to May 28, 2012 (the date of sale of the Argentina operations).

Discontinued operations
Revenue, net of royalties
Direct production and operating expenditures
Depletion and depreciation
General and administrative expenses
Sale transaction costs
Exploration and evaluation expenditures
Other income
Export taxes
Write down of non-current assets
Finance income
Finance costs
Foreign exchange gain
Income from discontinued operations

Cash flow from discontinued operations


Net cash flow used in operating activities
Net cash flow used in investing activities
Net cash flow used in discontinued operations

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 39

December 31
2012

December 31
2011

4,764

10,197

(1,906)
(147)
(768)
(1,886)
(26)
935
(88)
(568)
88
(130)
47
315

(4,710)
(4,004)
(1,292)
(45)
2,183
(247)
311
(272)
19
2,140

December 31
2012

December 31
2011

(365)
(1,121)
(1,486)

(1,204)
(2,372)
(3,576)

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
5) Restricted cash
December 31
2012
808
808

Restricted cash

December 31
2011
17,249
17,249

Restricted cash of $808 at December 31, 2012 relates to a British pounds sterling standby letter of
credit issued to the Sullom Voe Terminal as part of the operations of Causeway.
Restricted cash of $17,249 at December 31, 2011 relates to US dollar and British pounds sterling
standby letters of credit issued with respect to the Companys drilling program in the UK North Sea.
6) Inventory and prepaid expenses
December 31
2012

December 31
2011

4,498
1,379
5,877

240
240

Crude oil inventory


Prepaids

Inventory with a carrying amount of $4,498 (2011 nil) represents linefill and oil stocks available
for sale as at December 31, 2012. Included within this balance is depletion of $3,372.
7) Property, plant and equipment

Opening balance
Additions
Depletion and depreciation
Depletion and depreciation relating to assets held for sale
Changes in decommissioning estimate
Impairment
Transferred from exploration and evaluation assets
Reclassified to assets held for sale
Foreign currency translation
Ending balance

December 31
2012
15,207
58,250
(3,466)
158
9,347
1,573
81,069

December 31
2011
26,129
2,161
(191)
(4,004)
370
(3,184)
15,005
(19,536)
(1,543)
15,207

In November 2012, the Field Development Plan (FDP) for the Cormorant East Field was approved
by the Department of Energy and Climate Change (DECC). As a result, $9,347 of accumulated
exploration and evaluation costs were transferred to property, plant and equipment.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 40

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
During the year, the Company capitalized $152 (2011 - $23) of general and administrative and $61
(2011 - $20) of share-based compensation related to development activity.
At December 31, 2012, the Company assessed the carrying amount of its property, plant and
equipment assets for indicators of impairment such as changes in reserves and lower production
rates. Impairment tests were completed using an after-tax discount rate of 10 percent. The
following table outlines benchmark prices at December 31, 2012 used in the impairment test:
Brent crude oil
(US$/barrel)
107.50
102.50
101.40
100.80
100.10
+2.0%

2013
2014
2015
2016
2017
Thereafter

Exchange rate
(US$/C$)
1.00
1.00
1.00
1.00
1.00
1.00

Exchange rate
(US$/GBP)
1.60
1.60
1.60
1.60
1.60
1.60

No impairment existed at December 31, 2012 relating to the capitalized costs of property, plant and
equipment assets.
8) Exploration and evaluation assets

Opening balance
Additions
Changes in decommissioning estimate(1)
Disposals
Impairment
Transferred to property, plant and equipment
Reclassified to assets held for sale
Foreign currency translation
Ending balance
(1)

December 31
2012
122,431
9,219
1,850
(122,698)
(9,347)
5,476
6,931

December 31
2011
171,850
38,494
(288)
(22,035)
(45,917)
(15,005)
(608)
(4,060)
122,431

Changes in decommissioning obligation estimate are offset by decommissioning obligation dispositions of $1,362

During the year, the Company capitalized $425 (2011 - $558) of general and administrative costs
and $137 (2011 - $391) of share-based compensation related to exploration and evaluation activity.
In January 2013, the Company elected not to participate in further development work on the Fionn
Field. As a result, an impairment charge of $50,358 in 2012 was recognized, representing the full
carrying value relating to the Fionn Field CGU. Antrim retains a 35.5% interest in the remainder of
Licence P201 Block 211/22a South East Area.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 41

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
Licence P1625 Block 21/24b (West Teal) is nearing the end of its initial exploration term and
based on an evaluation performed by management the licence is not considered economically viable
to continue with. As a result the Company recognized an impairment charge of $1,841 million in
2012, relating to the full carrying value of this licence.
In December 2012, the Company announced that the Cyclone exploration well in UK Block 21/7b
was plugged and abandoned. As a result, an impairment charge of $5,939 was recognized in 2012
representing the full carrying value relating to this licence.
In October 2012, DECC agreed to waive the seismic and contingent well obligations on Licence
P1563 Blocks 21/28b & 21/29c (Carra) which allowed the Company to relinquish the licence in its
entirety. The Company recognized an impairment charge of $2,304 in 2012 representing the full
carrying value of this licence.
As at March 31, 2012, in accordance with IFRS, management performed an impairment assessment
on the carrying value of the Fyne Licence CGU as there were indications that the recoverable value
may be impaired. The facts and circumstances considered included the abandonment of the East
Fyne appraisal well, the expectation that the gross Fyne Field reserves would likely decline by
approximately 36%, the withdrawal of Premier Oil UK Limited (Premier) and First Oil Expro
Limited (First Oil) from the Joint Operating Agreement (JOA), the risk that Antrim may not
obtain approval of an FDP from DECC, the risk of Antrim not finding partners and the challenge in
securing funding for the project in a difficult market. In light of these events management
determined that the carrying value of the Fyne Licence CGU was impaired. The carrying value of
the Fyne Licence was written down to a $nil value with the Company incurring a $60,112
impairment charge in the first quarter of 2012. Costs incurred subsequent to March 31, 2012 of
$7,343 relating to this licence have been expensed as exploration and evaluation expenditures on the
statement of comprehensive loss.
The Company recognized an impairment charge in 2012 of $2,144 relating to the Erne discovery
well 21/29d-11 and the sidetrack well 21/29d-11Z. Post-well analysis of these two wells by the
Companys independent reserve evaluation engineers did not result in any reserves being assigned at
this time. The impairment charge is in addition to an impairment charge of $10,312 recognized in
the fourth quarter of 2011.
With the sale of the Companys subsidiary Antrim Causeway (N.I.) Limited (Antrim Causeway)
to Valiant Petroleum plc (Valiant) in October 2011, an impairment charge of $35,605 to
exploration and evaluation assets was recognized in 2011.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 42

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
9) Deferred revenue
December 31
2012
1,089

Deferred revenue

December 31
2011
-

Deferred revenue of $1,089 (2011 - $nil) relates to oil sales which have been invoiced during the
year but have not been lifted from the terminal therefore title and risk has not been transferred to the
buyer (see Note 15).
10) Decommissioning obligations

Opening balance
Additions
Accretion
Accretion relating to asset held for sale
Change in estimate
Dispositions
Reclassified to liabilities held for sale
Foreign currency translation
Ending balance

December 31
2012
3,595
4,259
145
3,370
(1,362)
263
10,270

December 31
2011
7,380
579
209
30
82
(1,561)
(2,529)
(595)
3,595

At December 31, 2012, the estimated undiscounted decommissioning obligations are $11,218 (2011
- $5,794). The Company expects the undiscounted obligations to be payable between 2016 and
2020.
In January 2013, the Company elected not to participate in further development work on the Fionn
Field. As a result of Antrims withdrawal of its 35.5% working interest, $1,362 of abandonment
liability was disposed of.
The change in estimate in 2012 is primarily related to increased costs estimates for the reclamation
of suspended wells, changes in working interest and revision to the timing of future
decommissioning obligation cash flows.
The present value of the decommissioning obligations has been calculated using a risk-free interest
rate of 1.6% (2011 - 3.8%) and an inflation rate of 2.0% (2011 2.0%).

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 43

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
11) Contingent consideration
December
31
2012
7,000
(7,000)
-

Opening balance
Revision to estimate
Ending balance

December 31
2011
8,000
(1,000)
7,000

Contingent consideration of $10,000 on the acquisition of the Fyne Field is payable to the seller
upon approval of an FDP by DECC. As at March 31, 2012, a fair value of $nil for the contingent
consideration was determined based on the impairment assessment performed with respect to the
Fyne Licence (See Note 8).
12) Share capital
Authorized
Unlimited number of common voting shares
Common shares issued
Balance, December 31, 2010
Issuance of common shares
Exercise of stock options
Transfer from contributed surplus
Share issuance costs

Number of
Shares
135,571,542
48,191,700
352,836
-

Amount
$
312,062
52,297
134
92
(2,998)

Balance, December 31, 2011


Exercise of stock options
Transfer from contributed surplus
Balance, December 31, 2012

184,116,078
614,998
184,731,076

361,587
186
149
361,922

13) Share-based compensation


The Company has a program whereby it may grant options to its directors, officers and employees to
purchase up to 10% of the issued and outstanding number of common shares. The exercise price of
each option is no less than the market price of the Companys stock on the date of grant. Stock
option terms are determined by the Companys Board of Directors but options typically vest evenly
over a period of three years from the date of grant and expire five years after the date of grant.
Share-based compensation for the year was $1,196 (2011 $1,294) of which $998 (2011 $883)
was expensed and $198 (2011 $411) was capitalized.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 44

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
The following table illustrates the number and weighted average exercise prices of and movements
in share options under the option program during the year.
2012

Outstanding at January 1
Granted
Forfeited/expired
Exercised
Outstanding at December 31
Exercisable at December 31

# of
Options
9,168,063
6,985,000
(3,188,000)
(614,998)
12,350,065
4,581,742

2011
Weighted
average
exercise
price
Cdn $
2.12
0.60
3.45
0.30
0.98
1.56

# of
Options
13,247,898
(3,726,999)
(352,836)
9,168,063
6,858,083

Weighted
average
exercise
price
Cdn $
2.20
2.59
0.37
2.12
2.49

The weighted average share price on the exercise date for share options exercised in 2012 was $0.77
(2011 - $1.19).
The range of exercise prices of the outstanding options is as follows:
Options outstanding

Range
of exercise
prices
Cdn $
0.27 1.00
1.01 2.00
2.01 3.00
3.01 3.92

Weightedaverage
exercise
price
Cdn $
0.55
1.02
2.49
3.87

WeightedNumber
average
outstanding
years
at remaining
December contractual
31, 2012
life
8,485,065
3.91
2,340,000
2.72
600,000
0.60
925,000
0.37
12,350,065

Options exercisable
WeightedWeightedNumber
average
average outstanding
years
exercise
at
remaining
price
December contractual
Cdn $
31, 2012
life
0.31
1,470,066
1.08
1.02
1,586,676
2.71
2.49
600,000
0.60
3.87
925,000
0.37
4,581,742

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 45

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
The fair values of options granted during the year were calculated using a Black Scholes valuation
model. The principal inputs to the option valuation model were:
2012
2011
Weighted average share price
0.60
Weighted average exercise price
0.60
Weighted average expected volatility
80.54%
Option life
4.5 years
Dividend yield
Nil
Weighted average risk-free interest rate
1.19%
Forfeiture rate
10%
Expected volatility was determined by calculating the historical volatility of the Companys share
price over a period commensurate with the expected lifetime of the options.
On July 26, 2012, as a result of the completion of the Arrangement for the sale of Antrim Argentina
S.A. and in accordance with the terms of the Companys stock option plan, the Company received
all necessary approvals to make a four cent reduction to the exercise price of the Antrim options
outstanding at the time of the Arrangement, so that Antrim option plan participants were neither
favoured nor penalized by the impact of the reduction of stated capital of Antrims common shares.
The modification of the exercise price resulted in an increase of $51 on the fair value of the stock
options outstanding. This incremental fair value has been recognized in share-based compensation.
14) Earnings per share
Loss used in the calculation from continuing operations
Income used in the calculation from discontinued operations
Net loss for the year

2012
134,859
(315)
134,544

2011
55,110
(2,140)
52,970

Basic earnings per share was calculated as follows:


Weighted average number of common shares:
Issued common shares
Effects of share options exercised
Effects of shares issued
Weighted average number of common shares basic

2012

2011

184,116,078
272,074
184,388,152

135,571,542
268,446
38,157,264
173,997,252

Diluted earnings per share was calculated as follows:


2012

2011

Weighted average number of common shares:


Weighted average number of common shares basic
Effect of outstanding options

184,388,152
1,140,005

173,997,252
1,415,216

Weighted average number of common shares diluted

185,528,157

175,412,468

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 46

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
There have been no other transactions involving ordinary shares or potential ordinary shares between
the reporting date and the date of completion of these financial statements.
2012
2011
Basic and diluted loss (earnings) per common share
From continuing operations
0.73
0.32
From discontinued operations
(0.00)
(0.01)
Total basic and diluted loss per share
0.73
0.31
For the years ended December 31, 2012 and 2011, all stock options were anti-dilutive and were not
included in the diluted common share calculation.
15) Revenue
Sales invoiced
Deferred revenue at the end of the year
Sales recognized as revenue

2012
1,089
(1,089)
-

2011
-

Revenue is recognized when title and risk transfer to the purchaser, which is at the time of lifting of
the oil into the tanker at the Sullom Voe terminal. All sales are made under contract to one UK
customer. Under the contract with the purchaser, Antrim invoices and receives payment for its oil in
the month after production; however, the purchaser retains certain rights impacting the timing of
liftings which may result in no sales in a particular month resulting in deferred revenue.
16) General and administrative expenses
2012
3,770
467
2,253
315
(962)
5,843

Wages and salaries


Occupancy
Administrative
Travel
Overhead recovery

2011
3,338
468
1,699
370
(871)
5,004

Total employee benefits expenses, including share-based compensation for the year ended December
31, 2012 were $4,966 (2011 - $4,632).
17) Finance income
2012
276

Interest income

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 47

2011
706

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
18) Finance costs

Accretion of decommissioning obligations


Interest expense
Bank charges

2012
145
68
213

2011
209
172
205
586

19) Supplemental cash flow information


(Increase) / decrease of assets:
Trade and other receivables
Inventory and prepaid expenses
Increase / (decrease) of liabilities:
Trade and other payables
Deferred revenue

Cash and cash equivalents are comprised of:


Cash in bank
Short-term deposits

2012

2011

4,962
(2,284)

(1,764)
487

950
1,089
4,717

13,965
12,688

2012
1,503
1,503

2011
19,921
27,184
47,105

20) Income taxes


The differences between the expected income tax provision and the reported income tax provision
are summarized as follows:
2012
2011
Loss from continuing operations before income taxes
134,859
55,110
Statutory income tax rate
25%
26.5%
Expected recovery
33,715
14,604
Increase (decrease) in taxes resulting from:
Non-deductible expenses
Effect of different tax rates in foreign jurisdictions
Changes in statutory rate changes in the year
Benefit of tax losses not recognized

(16,692)
(10,767)
412
(6,668)
-

(9,575)
2,635
104
(7,768)
-

The statutory tax rate was 25% in 2012 (2011 26.5%). The decrease from 2011 to 2012 was as a
result of previously enacted reductions in the federal corporate income tax rates.
There was no income tax expense relating to discontinued operations.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 48

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
Deferred income tax
The deferred income tax assets are comprised of the following:

Property, plant and equipment


Decommissioning obligations
Non-capital losses
Capital losses
Share issuance and financing costs
Other
Unrecognized deferred tax asset

December 31
2012
(25,083)
3,081
94,165
1,447
1,103
249
(74,962)
-

December 31
2011
(39,139)
1,078
63,995
755
149
(26,838)
-

The Company has unused non-capital tax losses of $310,676 (2011 $220,754) to carry forward
against future taxable income of subsidiaries in which the losses arose. Some of these deferred tax
assets were recognized in the current period as the Company anticipates being able to use them to
offset taxable profits in its operations in the United Kingdom.
At December 31, 2012, the Company had the following available tax loss carryforwards:
Expiry Dates
Loss carryforwards attributable to continuing operations:
Canada
United Kingdom
Ireland

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 49

2014-2031
No Expiry
No Expiry

$
26,809
283,841
26
310,676

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
21) Commitments and contingencies
The Company has commitments in respect of its petroleum and natural gas properties and operating
leases as follows:
United Kingdom
Causeway(1)
Cormorant East
Fyne and Dandy(2)
Cyclone Typhoon(3)
West Teal(4)
Carra(5)
Erne
Ireland
Office leases
Total
(1)

2013

2014

2015

2016

2017

Thereafter

16,079
654
2,913
13
13
69
358

7,073
8
33
12
13
359

27
8
33
372

29
8
33
372

31
8
33
350

31
8
33
10

20,099

7,498

440

442

422

82

Relates to Antrims 35.5% interest in the Causeway Licences.

(2) In 2012, Antrim signed a Heads of Terms Agreement for an option to lease an FPSO for use in the development of the Fyne Field. As
the Company decided not to proceed with the development of the Fyne Field, there is a $2.8 million obligation related to front end
engineering design work. This obligation is included on the consolidated balance sheet as at December 31, 2012 under accounts
payables and accrued liabilities.
(3) The Company has a $6.2 million contingent drilling commitment on this licence for the Typhoon prospect in 2014. Due to the results
of the Cyclone well, the Company has asked DECC to accept this well as a fulfillment of the drilling obligation. Contingent on DECC
acceptance, there are no remaining obligations for the initial term of the licence.
(4) The Company has a $24.0 million contingent drilling commitment on this licence for the West Teal prospect in 2013. Due to the
Company being unable to identify a commercially viable export route a request was made to DECC to waive the contingent well
requirement and, with DECCs consent, allow the licence to be relinquished (see Note 8).
(5) In October 2012, DECC waived all commitments related to the Licence P1563 Blocks 21/28b & 21/29c. In February 2013, the licence
and all commitments were officially relinquished.

Contingencies
In 2011, the Company entered into a variation to an existing contract for drilling management
services in the UK North Sea which required the drilling of two wells, estimated to take 50 days in a
letter of intent preceding the contract variation. The Company contends that it met its contractual
obligations under this variation through the drilling of the Erne pilot well (21/29d-11) and the Erne
sidetrack well (21/29d-11Z). The drilling of these two wells took place over a period of 58
days. Subsequent to releasing the rig, the Company received an invoice from the drilling
management services contractor charging the Company for approximately $5 million in additional
costs as the contractor claims all conditions of the contract had not yet been satisfied. In July 2012,
the drilling management services contractor filed a claim against the Company for the additional
invoice costs plus interest and lost management time, in the High Court of England and Wales. In
August 2012, the Company filed a defence against this claim in the High Court of England and
ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 50

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
Wales. A case management conference where the Court will set the timetable for the claim going
forward has been listed for April 12, 2013. The Company is disputing the additional costs and
believes it is more likely than not that it will not have to pay. As a result, a contingent liability has
not been recorded.
In January 2013, the Company elected not to participate in further development work on the Fionn
Field. Subject to all necessary approvals from DECC, Antrim intends to withdraw from the Fionn
Field subarea and will not incur any further liabilities. In accordance with the Fionn Field
Supplemental Agreement, signed in January 2012, the Company is of the position that there are no
further obligations with respect to the decommissioning or well abandonment liabilities of the three
currently suspended wells in the Fionn Field subarea. The operator contends this position in regards
to two of the three currently suspended wells. The Company believes it is more likely than not that
Antrim will be released of these obligations. Accordingly, no amounts have been recorded in
decommissioning obligations in relation to the Fionn Field (see Note 10).
Operating lease arrangements
Minimum lease payments under operating leases recognized as an
expense in the year

2012

2011

470

At the balance sheet date, the Company had outstanding commitments for future minimum lease
payments under non-cancellable operating leases, which fall due as follows:

Within one year


In the second to fifth years inclusive

2012
358
1,464
1,822

2011
-

Operating lease payments represent net rentals payable by the Company for its office properties.
Current lease arrangements expire at the end of December 2017.
22) Financial instruments and financial risks
Financial instruments
Financial assets and financial liabilities are initially recognized at fair value and are subsequently
accounted for based on their classification. The classification categories, which depend on the
purpose for which the financial instruments were acquired and their characteristics, include held-fortrading, available-for-sale, held-to-maturity, loans and receivables, investments, and other liabilities.
Except in very limited circumstances, the classification is not changed subsequent to initial
recognition.
The Companys financial instruments consist of cash, cash equivalents, restricted cash, accounts
receivable, other non-current assets, accounts payable and contingent consideration. Cash and cash
ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 51

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
equivalents, restricted cash, and accounts receivable are classified as loans and receivables and are
accounted for at amortized cost. Accounts payable are classified as other liabilities and are
accounted for at amortized cost. Due to the short-term maturity of the Companys financial
instruments, fair values approximate carrying amounts.
Financial risks
The Company is exposed to financial risks encountered during the normal course of its business.
These financial risks are composed of credit risk, liquidity risk and market risk including commodity
price and foreign currency exchange risks.
(a) Credit risk
The Company is exposed to the risk that its counterparties will fail to discharge their obligations to
the Company on its cash, cash equivalents, accounts receivable and certain non-current assets.
Cash and cash equivalents and restricted cash are on deposit with reputable Canadian and
international banks, and therefore the Company does not believe these financial instruments are
subject to material credit risk. The Company sells all of its production to one oil and natural gas
marketer and therefore is subject to concentration risk. Management does not believe that this
concentration of credit risk will result in any loss to the Company based on past payment experience
and its investment grade credit rating as established by independent credit rating agencies.
The Companys sales from discontinued operations are approximately 40% to a single customer and
three customers who each have sales of greater than 10%. Factors included in the assessment of
accounts receivable for impairment are the relationship between the purchaser and the Company and
the age of the receivable. As at December 31, 2012, the Company has provided for an allowance for
doubtful accounts of $nil (2011 - $nil).
The extent of the Companys credit risk exposure is identified in the following table:
December 31
2012

December 31
2011

1,503
808
332
2,643

47,105
17,249
5,294
8,200
77,848

Current
Cash and cash equivalents
Restricted cash
Accounts receivable
Assets held for sale(1)

(1) Relates to cash and cash equivalents classified as assets held for sale as at December 31, 2011 and the non-interest bearing promissory
note and interest bearing bond which were classified as non-current as at December 31, 2011.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 52

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
(b) Liquidity risk
The Company is exposed to liquidity risk from the possibility that it will encounter difficulty
meeting its financial obligations. The Company manages this risk by forecasting cash flows in an
effort to identify future liabilities and arrange financing, if necessary. It may take many years and
substantial cash expenditures to pursue exploration and development activities on all of the
Companys existing undeveloped properties. Accordingly, the Company will need to raise
additional funds from outside sources in order to explore and develop its properties. There is no
assurance that adequate funds from debt and equity markets will be available to the Company in a
timely manner.
At December 31, 2012, the Company had a working capital deficiency of $10,734, compared to
working capital of $52,674 at December 31, 2011. In January 2013 the Company entered into a $30
million Payment Swap transaction described in Note 24. The Payment Swap provides the Company
with sufficient funding to meet its commitments for cost overruns on the completion of the
production well in the Causeway Field and future costs related to the Causeway development
program. The contractual maturities of the Companys financial liabilities at December 31, 2012 are
all less than one year.
(c) Market risk
Market risk consists of commodity price risk and foreign currency exchange risk.
Commodity price risk
Currently all of the Companys production is from one property in the UK. Commodity price risk
related to crude oil production represents a significant market risk exposure. Crude oil prices and
quality differentials can be influenced by global supply and demand factors as well as political
events, quotas imposed on members of the Organization of Petroleum Exporting Countries (OPEC)
and weather. In January 2013, Antrim entered into a Brent Oil Price Commodity Swap which
reduced its exposure to commodity price risk (see Note 24).
Foreign currency exchange risk
The Company is exposed to fluctuations in foreign currency exchange rates as many of the
Companys financial instruments are denominated in United States dollars and British pounds
sterling (). As a result, fluctuations in the United States dollar and British pounds sterling against
the Canadian dollar could result in unanticipated fluctuations in the Companys financial results.
The Company seeks to minimize foreign exchange risk by holding cash and cash equivalents in
Canadian dollars when not required in support of current operations. A 1% change in the Cdn$/US$
and Cdn$/ exchange rate at December 31, 2012 would impact comprehensive income by
approximately $1,123 and $739, respectively.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 53

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
Capital management
The Companys objective when managing its capital is to maintain adequate levels of funding to
support its exploration and development program and provide flexibility in the future development
of its business. Historically the Company raised all of its capital requirements from internally
generated cash flow and the issuance of common shares and securities exchangeable for common
shares. In the fourth quarter of 2012, the Company incurred unexpected cost overruns on the
development of Causeway resulting in a working capital deficiency as at December 31, 2012.
The Companys capital structure at December 31, 2012 consisted of cash and cash equivalents and
shareholders equity. Shareholders equity includes shareholders capital, contributed surplus, and
accumulated other comprehensive loss and deficit. The Company had no bank debt at December 31,
2012; however, it assumed debt obligations in January 2013 when it entered into a Payment Swap
transaction (see Note 24).
The capital structure of the Company consists of:

Cash and cash equivalents


Shareholders equity

December 31
2012
1,503
(66,996)

December 31
2011
47,105
(207,188)

(65,493)

(160,083)

Current restrictions on the availability of credit may limit the Companys ability to access debt or
equity financing for its development projects. The Company forecasts cash flows against a range of
macroeconomic and financing market scenarios in an effort to identify future liabilities and arrange
financing, if necessary. Although the Company may need to raise additional funds from outside
sources, if available, in order to develop its oil and gas properties, the Company maintains flexibility
to manage financial commitments on these assets.
Methods employed to adjust the Companys capital structure could include any, all or a combination
of the following activities:
(i) Issue new shares through a public offering or private placement;
(ii) Issue equity linked or convertible debt;
(iii) Raise fixed or floating rate debt;
(iv) Sell or farmout existing exploration, development and producing assets.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 54

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
23) Related party transactions
The financial statements include the financial statements of Antrim and the subsidiaries listed in the
following table:
Equity interest
in %
Country of
Subsidiary
Incorporation
2012
2011
Antrim Argentina S.A.
Argentina
100
Antrim Energy Ltd.
Bahamas
100
100
Antrim Exploration (Ireland) Limited
Ireland
100
100
Antrim Resources (N.I.) Limited
United Kingdom
100
100
Netherfield Corporation(1)
British Virgin Islands
100
(1)

This entity was amalgamated with Antrim Energy Inc. as part of the plan of arrangement discussed in Note 4.

Compensation of key management personnel of the Company


Key management personnel include directors and executives of the Company. The compensation
paid or payable to key management personnel is as follows:

Short-term employee benefits


Share-based compensation
Total compensation paid to key management personnel

2012
2,190
792
2,982

2011
1,643
753
2,396

Other related party transactions


The Company may from time to time enter into arrangements with related parties which are
accounted for at the exchange amount. In 2012, the Company incurred fees of $422 (2011 - $267)
payable to Burstall Winger LLP, a law firm in which a director of the Company is a partner.
24) Subsequent events
In January 2013, the Company elected not to participate in further development work on the Fionn
Field. Subject to all necessary approvals from DECC, Antrim intends to withdraw from the Fionn
Field subarea and will not incur any further liabilities, including remaining decommissioning or well
abandonment liabilities. As a result of its withdrawal, the Company recorded a $50,358 impairment
charge as at December 31, 2012.
On January 23, 2013, Antrim announced that it entered into a $30 million Payment Swap transaction
with a major financial institution. Under the terms of the Payment Swap, the Company received $30
million which is repayable in 29 instalments commencing September 2013 and concluding January
2016. The interest rate under the Payment Swap is fixed at 5.1%. Antrim also entered into a Brent
Oil Price Commodity Swap to forward sell 657,350 barrels of Brent crude oil at a fixed price of
$89.37 covering the period from February 2013 to December 2015.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 55

Notes to Consolidated Financial Statements


For the years ended December 31, 2012 and 2011
(Amounts in US$ thousands, except as otherwise noted)
On March 26, 2013 the Company discontinued development of the Fyne Field. Until very recently,
estimated costs indicated that the planned Fyne development satisfied the Companys economic
threshold and contingent on timing of the redeployment of the FPSO from its current location was on
track for a late 2014 start-up. However, projected capital costs have recently increased substantially,
and in the Companys view now make the project uneconomic.

ANTRIM ENERGY INC. 2012 ANNUAL REPORT | 56

DIRECTORS

HEAD OFFICE

Stephen Greer
President and Chief Executive Officer,
Antrim Energy Inc.

610, 301 8th Avenue SW


Calgary, Alberta
Canada T2P 1C5
Main: +1 403 264 5111
Fax: + 1 403 264 5113
info@antrimenergy.com
www.antrimenergy.com

Colin Maclean (2) (3) (4) (5)


Independent Director
Dr. Gerry Orbell (1) (3) (4) (5)
Chairman,
Antrim Energy Inc.

The Companys website is not incorporated by reference in


and does not form a part of this annual report.

Erik Mielke
Independent Director

LONDON OFFICE
Ashbourne House, The Guildway
Old Portsmouth Road, Artington
Guildford, Surrey
United Kingdom GU3 1LR
Main: +44 (0) 1483-307 530
Fax: +44 (0) 1483-307 531

Jim Perry (1) (3) (4) (5)


President and CEO,
Alternative Fuel Systems (2004) Inc.
Jim Smith (1) (2) (5)
Independent Director
Jay Zammit (2) (5)
Partner,
Burstall Winger LLP
(1)
(2)
(3)
(4)
(5)

INTERNATIONAL SUBSIDIARIES

Member of the Audit Committee


Member of the Compensation Committee
Member of the Reserves Committee
Member of the Exploration Committee
Member of the Corporate Governance Committee

Antrim Energy Ltd.


Antrim Exploration (Ireland) Limited
Antrim Resources (N.I.) Limited
LEGAL COUNSEL
Burstall Winger LLP
Calgary, Alberta

OFFICERS
Stephen Greer
President and Chief Executive Officer

BANKERS
Toronto-Dominion Bank of Canada

Anthony Potter
Chief Financial Officer
AUDITORS
Kerry Fulton
Vice President, Operations

PricewaterhouseCoopers LLP
Calgary, Alberta

Terry Lederhouse
Vice President, Commercial
INDEPENDENT ENGINEERS
Martin Dashwood
Vice President, Exploration

McDaniel & Associates Consultants Ltd.

Adrian Harvey
Corporate Secretary

REGISTRAR AND TRANSFER AGENT

STOCK EXCHANGE LISTINGS


Toronto Stock Exchange: Trading Symbol AEN
London Stock Exchange (AIM): Trading Symbol AEY

Inquiries regarding change of address, registered


shareholdings, stock transfers or lost certificates should be
direct to:
CIBC Mellon Trust Company
Calgary, Alberta

ANTRIM ENERGY INC. ANNUAL REPORT | 57

Bankers Hall/Hollinsworth Bldg


610, 301 8th Avenue SW
Calgary, AB Canada T2P 1C5
Tel 1 403 264 5111
Fax 1 403 264 5113
www.antrimenergy.com